Exhibit 10.5


 


Lease Agreement

(NNN)

Basic Lease Information


 


	
  Lease
  Date:

  	
   

  	
  April 16,
  2009

  
	
   

  	
   

  	
   

  
	
  Landlord:

  	
   

  	
  FSP
  Montague Business Center Corp.,

  
	
   

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
  Landlord’s Address:

  	
   

  	
  c/o
  Franklin Street Properties 

  401 Edgewater Place, Suite 200 

  Wakefield, MA 01880

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  AltiGen
  Communications, Inc.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  Tenant’s Address:

  	
   

  	
  410
  East Plumeria Drive 

  San
  Jose, California 95134

  
	
   

  	
   

  	
   

  
	
  Premises: 

  	
   

  	
  Approximately
  27,576 rentable square feet as shown on Exhibit A

  
	
   

  	
   

  	
   

  
	
  Premises Address:

  	
   

  	
  410
  East Plumeria Drive, San Jose, California

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Building: Approximately 55,484 rentable square feet

  
	
   

  	
   

  	
  Lot: The legal parcel upon which the building is situated

  
	
   

  	
   

  	
  Montague Business Center (“Park”); Approximately 145,951 rentable square feet

  
	
   

  	
   

  	
   

  
	
  Term:

  	
   

  	
  Subject
  to Exhibit B attached hereto, the later of (i) fifteen (15) days
  following the Substantial Completion of the Tenant Improvements (excluding
  the Initial Cabling and Security System)(as each term is defined in Exhibit B
  attached hereto) or (ii) June 1, 2009 (“Commencement Date”) through
  five (5) years following the Commencement Date (“Expiration Date”)

  
	
   

  	
   

  	
   

  
	
  Base Rent (¶3):

  	
   

  	
   

  



 


	
   

  	
   

  	
  Months

  	
   

  	
  Monthly Base Rent

  	
   

  
	
   

  	
   

  	
  01-12

  	
   

  	
  $

  	
  17,924.40

  	
   

  
	
   

  	
   

  	
  13-24

  	
   

  	
  $

  	
  23,439.60

  	
   

  
	
   

  	
   

  	
  25-36

  	
   

  	
  $

  	
  24,818.40

  	
   

  
	
   

  	
   

  	
  37-48

  	
   

  	
  $

  	
  26,197.20

  	
   

  
	
   

  	
   

  	
  49-60

  	
   

  	
  $

  	
  27,576.00

  	
   

  



 


	
  Advance Rent (¶3):

  	
   

  	
  Seventeen
  Thousand Nine Hundred Twenty Four and 40/100 Dollars ($17,924.40)

  



 


	
  Letter of Credit: (Addendum 1): 

  	
   

  	
  One
  Hundred Thousand Dollars ($100,000.00)

  



 


	
  Tenant’s Share of Operating Expenses (¶6.1):

  	
   

  	
  18.9%
  of the Park, 49.7% of the Building

  
	
  Tenant’s Share of Tax Expenses (¶6.2):

  	
   

  	
  18.9%
  of the Park, 49.7% of the Building

  
	
  Tenant’s Share of Common Area Utility Costs (¶7.2):

  	
   

  	
  18.9%
  of the Park, 49.7% of the Building

  
	
  Tenant’s Share of Utility Expenses (¶7.1):

  	
   

  	
  18.9%
  of the Park, 49.7% of the Building

  



 


	
  Permitted Uses (¶9):

  	
   

  	
  Engineering,
  warehousing, research and development, manufacturing and assembly, and
  administrative offices, but only to the extent permitted by the City of San
  Jose and all agencies and governmental authorities having jurisdiction
  thereof.

  
	
   

  	
   

  	
   

  
	
  Parking Spaces: 

  	
   

  	
  18.9%
  of the non-exclusive and non-designated spaces located at the Park

  
	
   

  	
   

  	
   

  
	
  Broker (¶33):

  	
   

  	
  Cornish &
  Carey for Tenant

  
	
   

  	
   

  	
  [None
  for Landlord]

  
	
   

  	
   

  	
   

  
	
  Exhibits:

  	
   

  	
  Exhibit A -             Premises, Building, Lot
  and/or Park

  
	
   

  	
   

  	
  Exhibit B -             Tenant Improvements

  
	
   

  	
   

  	
  Exhibit C -            Rules and Regulations

  
	
   

  	
   

  	
  Exhibit D -            Tenant’s Initial Hazardous
  Materials
  Disclosure
  Certificate

  
	
   

  	
   

  	
  Exhibit E -             Change of Commencement
  Date - Example

  
	
   

  	
   

  	
   

  
	
  Addenda:

  	
   

  	
  Addendum 1 -       Letter of Credit

  
	
   

  	
   

  	
  Addendum 2 -       Option to Extend

  



 


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Table of Contents


 


Section Page


 


	
  1.

  	
   

  	
  Premises

  	
   

  	
  1

  
	
  2.

  	
   

  	
  Occupancy;
  Adjustment of Commencement Date

  	
   

  	
  1

  
	
  3.

  	
   

  	
  Rent

  	
   

  	
  1

  
	
  5.

  	
   

  	
  Condition
  of Premises; Tenant Improvements

  	
   

  	
  1

  
	
  6.

  	
   

  	
  Additional
  Rent

  	
   

  	
  1

  
	
  7.

  	
   

  	
  Utilities
  and Services

  	
   

  	
  3

  
	
  8.

  	
   

  	
  Late
  Charges

  	
   

  	
  3

  
	
  9.

  	
   

  	
  Use
  of Premises

  	
   

  	
  3

  
	
  10.

  	
   

  	
  Alterations;
  and Surrender of Premises

  	
   

  	
  4

  
	
  11.

  	
   

  	
  Repairs
  and Maintenance

  	
   

  	
  5

  
	
  12.

  	
   

  	
  Insurance

  	
   

  	
  6

  
	
  13.

  	
   

  	
  Limitation
  of Liability and Indemnity

  	
   

  	
  7

  
	
  14.

  	
   

  	
  Assignment
  and Subleasing

  	
   

  	
  7

  
	
  15.

  	
   

  	
  Subordination

  	
   

  	
  8

  
	
  16.

  	
   

  	
  Right
  of Entry

  	
   

  	
  9

  
	
  17.

  	
   

  	
  Estoppel
  Certificate

  	
   

  	
  9

  
	
  18.

  	
   

  	
  Tenant’s
  Default

  	
   

  	
  9

  
	
  19.

  	
   

  	
  Remedies
  for Tenant’s Default

  	
   

  	
  9

  
	
  20.

  	
   

  	
  Holding
  Over

  	
   

  	
  10

  
	
  21.

  	
   

  	
  Landlord’s
  Default

  	
   

  	
  10

  
	
  22.

  	
   

  	
  Parking

  	
   

  	
  10

  
	
  23.

  	
   

  	
  Transfer
  of Landlord’s Interest

  	
   

  	
  10

  
	
  24.

  	
   

  	
  Waiver

  	
   

  	
  11

  
	
  25.

  	
   

  	
  Casualty
  Damage

  	
   

  	
  11

  
	
  26.

  	
   

  	
  Condemnation

  	
   

  	
  11

  
	
  27.

  	
   

  	
  Environmental
  Matters/Hazardous Materials

  	
   

  	
  12

  
	
  28.

  	
   

  	
  Financial
  Statements

  	
   

  	
  13

  
	
  29.

  	
   

  	
  General
  Provisions

  	
   

  	
  13

  
	
  30.

  	
   

  	
  Signs

  	
   

  	
  15

  
	
  31.

  	
   

  	
  Mortgagee
  Protection

  	
   

  	
  15

  
	
  32.

  	
   

  	
  Warranties
  of Tenant

  	
   

  	
  15

  
	
  33.

  	
   

  	
  Brokerage
  Commission

  	
   

  	
  15

  
	
  34.

  	
   

  	
  Quiet
  Enjoyment

  	
   

  	
  16

  
	
  35.

  	
   

  	
  Rooftop
  Equipment

  	
   

  	
  16

  



 


ii

















 


NNN Tenant Improvements

Lease Agreement


 


The Basic Lease Information and this Lease are,
and shall be construed as, a single instrument. 


 


1.       Premises


 


Landlord leases the Premises to Tenant upon the
terms and conditions contained herein. Tenant shall have the right to use, on a
non-exclusive basis, parking areas and ancillary facilities located within the
Common Areas of the Project, subject to the terms of this Lease. For purposes
of this Lease, (i) as of the Lease Date, the rentable square footage area
of each of the Premises, the Building and the Park shall be deemed to be the
number of rentable square feet as set forth in the Basic Lease Information, (ii) the
rentable square footage of the Premises may include a proportionate share of
certain areas used in common by all occupants of the Building and/or the Park (for
example corridors, common restrooms, an electrical room or telephone room) and
(iii) the number of rentable square feet of any of the Building and the Park may subsequently change
after the Lease Date commensurate with any physical modifications to any of the
foregoing by Landlord, and Tenant’s Share shall accordingly change. The term “Project”
means and collectively refers to the Building, Common Areas, Lot and Park.


 


2.             Occupancy; Adjustment of Commencement Date


 


2.1          If Landlord, for any reason whatsoever, cannot
deliver possession of the Premises to Tenant on the Commencement Date in the
condition specified in Section 5 hereof, Landlord shall neither be subject
to any liability nor shall the validity of this Lease be affected. If the
commencement date and/or the expiration date of this Lease is other than the
Commencement Date and Expiration Date specified in the Basic Lease Information,
the parties shall execute a written amendment to this Lease, substantially in
the form of Exhibit E hereto specifying the actual commencement date, expiration
date and the date on which Tenant is to commence paying Rent. Tenant shall
execute and return such amendment to Landlord within fifteen (15) days after
Tenant’s receipt thereof. The word “Term” means the initial term of this Lease
and any valid extension(s) thereof.


 


2.2          Provided that the Tenant Improvements (excluding
the Initial Cabling and Security System) (as defined in Exhibit B) are
Substantially Complete (as defined in Exhibit B), Tenant may occupy
the Premises prior to the actual Commencement Date, such occupancy shall be at
Tenant’s sole risk and subject to all the provisions of this Lease (excluding
the obligation to pay Base Rent or Tenant’s Share of Operating Expenses or Tax
Expenses). Additionally, Landlord shall have the right to impose additional
reasonable conditions on Tenant’s early occupancy.


 


3.             Rent


 


On the date that Tenant executes this Lease, Tenant
shall deliver to Landlord the original executed Lease, the Advance Rent (which
shall be applied against Rent payable for the first month(s) Tenant is
required to pay Rent), the Letter of Credit, and all insurance certificates
required to be delivered under Section 12 and Exhibit B of this Lease. Tenant
agrees to pay Landlord without prior notice or demand, abatement, offset, deduction
or claim, in advance at Landlord’s Address, on the Commencement Date and
thereafter on the first (1st) day of each month throughout the Term (i) Base
Rent and (ii) as Additional Rent, Tenant’s Share of Operating Expenses, Tax
Expenses, Common Area Utility Costs, and Utility Expenses. The term “Rent” means the aggregate of all
these amounts. If Landlord permits Tenant to occupy the Premises without
requiring Tenant to pay rental payments for a period of time, the waiver of the
requirement to pay rental payments shall only apply to the waiver of Base Rent.
If any rental payment date (including the Commencement Date) falls on a day of
the month other than the first day of such month or if any rental payment is
for a period which is shorter than one (1) month, then the rental for any
such fractional month shall be a proportionate amount of a full calendar month’s
rental based on the proportion that the number of days in such fractional
month bears to the number of days in the calendar month during which the
fractional month occurs. All other payments or adjustments required to be made
under the terms of this Lease that require proration on a time basis shall be
prorated in the same manner. To the extent not already paid as part of the
Advance Rent any prorated Rent shall be paid on the Commencement Date, and any
prorated Rent for the final calendar month shall be paid on the first day of the calendar month in
which the date of expiration or termination occurs.


 


4.             Intentionally omitted.


 


5.             Condition of Premises; Tenant Improvements


 


Tenant agrees (i) to accept the Premises on the Commencement
Date (and by taking possession of the Premises Tenant shall be deemed to have
accepted the Premises) as then being suitable for Tenant’s intended use and in
good operating order, condition and repair in its then existing “AS IS” condition, except as otherwise set forth in Exhibit B hereto and herein, (ii) that
neither Landlord nor any of Landlord’s agents, representatives or
employees has made any representations, express or implied, as to the suitability,
merchantability, fitness, quality or condition of the Premises for the conduct
of Tenant’s business or for any other purpose, including without limitation, any
storage incidental thereto and (iii) the Premises, Building and Park fully comply with any of Landlord’s covenants and obligations
hereunder; provided, however, Landlord shall deliver the Premises to Tenant
clean and free of debris with the carpets cleaned and all existing plumbing, electrical
systems, fires sprinkler system, lighting, air conditioning and heating systems
and loading doors, if any, in the Premises in good operating condition on the Commencement
Date. The Tenant Improvements (defined in Exhibit B) shall be installed
in accordance with the terms and provisions of Exhibit B. Tenant hereby waives,
to the extent permitted by law, any claim or cause of action based upon any
warranties, either express or implied, as to habitability, merchantability, suitability,
quality, condition or fitness for any particular purpose with regard to the
premises, the Building or the Park. Tenant represents and warrants to Landlord
that Tenant has had an opportunity to measure the actual dimensions of the
Premises and the building and agrees
to the square footage calculations set
forth in this Lease for all purposes.


 


6.             Additional Rent


 


Landlord and Tenant intend that this Lease be a “triple net lease.” The costs and expenses described in this Section 6
and all other sums, charges, costs and expenses specified in this Lease other
than Base Rent are to be paid by Tenant to Landlord as additional rent (collectively,
“Additional Rent”).


 


6.1          Operating Expenses:


 


                                6.1.1       Definition of Operating Expenses: Tenant shall pay to
Landlord Tenant’s Share of all Operating Expenses as Additional Rent. The term “Operating
Expenses” means the total amounts paid or payable by Landlord in connection
with the ownership, management, maintenance, repair and operation of the
Premises and Project. The term “Common Areas” means all areas and facilities
within the Project exclusive of the Premises and other portions of the Project
leasable exclusively to other tenants. The Common Areas include, but are not
limited to, interior lobbies, mezzanines, parking areas, access and perimeter
roads, sidewalks, rail spurs (if any), and landscaped areas. Operating Expenses
may include, but are not limited to, Landlord’s cost of: (i) repairs to, and
maintenance (but excluding replacement) of the roof membrane, the
non-structural portions of the roof and the non-structural elements of the
perimeter exterior walls of the Building; (ii) maintaining the Common
Areas of the Project; (iii) annual insurance premium(s) for any and
all insurance Landlord elects to obtain, including without limitation, “all
risk” or “special purpose” coverage, earthquake and flood for the Project, rental
value insurance and any commercially reasonable deductible (provided that any
earthquake


 


1

















 


deductible
shall be amortized on a straight-line basis over the estimated useful life of
the repaired or replaced improvements, as reasonably determined by Landlord, together
with reasonable interest on the unamortized balance); (iv) (a) modifications
and/or new improvements to any portion of the Project occasioned by any rules, laws
or regulations effective subsequent to the Lease Date; (b) reasonably
necessary replacement improvements to any portion of the Project after the
Commencement Date; and (c) new improvements to the Project that are
intended to reduce operating costs or improve life/safety conditions, all of
the foregoing as reasonably determined by Landlord; provided, if such
costs are of a capital nature, then such costs or allocable portions thereof
shall be amortized on a straight-line basis over the estimated useful life of
the capital item, as reasonably determined by Landlord, together with
reasonable interest on the unamortized balance; (v) the management and
administration of the Project, including, without limitation, a property
management fee, accounting, auditing, billing, postage, salaries and benefits
for employees, whether located on the Project or off-site, payroll taxes and
legal and accounting costs and all fees, licenses and permits related to the
ownership, operation and management of the Project, provided that any
management and administration fee shall not exceed three percent (3%) of the
gross rents for the Project; (vi) preventative maintenance and repair
contracts including, but not limited to, contracts for elevator systems (if
any), heating, ventilation and air conditioning systems and lifts for disabled persons; (vii) security
and fire protection services for any portion of the Project, if and to the
extent, in Landlord’s sole discretion, such services are provided; (viii) the
creation and modification of any licenses, easements or other similar
undertakings with respect to the Project; (ix) supplies, materials, equipment,
rental equipment and other similar items used in the operation and/or
maintenance of the Project and any reasonable reserves established for
replacement or repair of any Common Area improvements or equipment; (x) any
and all levles, charges, fees and/or assessments payable to any applicable
owner’s association or similar body; (xi) any barrier removal work or other
required improvements, alterations or work to any portion of the Project
generally required under the ADA (defined below) (the “AM Work”); provided,
(a) if such costs are of a capital nature, then such costs or
allocable portions thereof shall be amortized on a straight-line basis over the
estimated useful life of the capital item, as reasonably determined by Landlord
in accordance with sound accounting principles, together with reasonable
interest on the unamortized balance; and (b), If such ADA Work is required
under the ADA due to Tenant’s use of the Premises or any Alteration (defined
below) made to the Premises by or
on behalf of Tenant, then the cost of such ADA Work shall be borne solely by
Tenant and shall not be included
as part of the Operating Expenses; and (xii) the repairs and maintenance items
set forth in Section 11.2 below. Landlord shall have the right, from time
to time, to equitably allocate and prorate some or all of the Operating
Expenses among different tenants and/or different buildings of the Project
and/or on a building by building basis (the “Cost Pools”). In such event, Tenant’s
Share shall be commensurately revised to reflect any such increases or
decreases.


 


6.1.2       Operating Expense Exclusions: The term “Operating
Expenses” shall not include: (i) costs (including permit, license, and
inspection fees) incurred in renovating, improving or decorating vacant space
or space for other tenants within the Project; (ii) costs incurred because
Landlord or another tenant actually violated the terms and conditions of any
lease within the Project; (iii) legal and auditing fees (other than those fees
reasonably incurred in connection with the maintenance and operation of any
portion the Project), leasing commissions, advertising expenses, and other
costs incurred in connection with the original leasing of the Project or future
re-leasing of any portion of the Project; (iv) depreciation of the
Building or any other improvements situated within the Project; (v) any
Items for which Landlord is actually reimbursed; (vi) costs of repairs or
other work necessitated by casualty (excluding any deductibles) and/or costs of
repair or other work necessitated by the exercise of the right of eminent
domain to the extent insurance proceeds or a condemnation award, as applicable,
is actually received by Landlord for such purposes; provided, such costs
of repairs or other work shall be paid by the parties in accordance with the
provisions of Sections 25 and 26, below; (vii) other than any interest
charges for capital improvements referred to in Section 6.1.1(iv) hereinabove,
any interest or payments on any financing for the Building or the Project, interest
and penalties incurred as a result of Landlord’s late payment of any invoice (provided
that Tenant pays Tenant’s Share of Operating Expenses and Tax Expenses to
Landlord when due as set forth herein), and any bad debt loss, rent loss or
reserves for same; (viii) costs associated with the investigation and/or
remediation of Hazardous Materials (hereafter defined) present in, on or about
any portion of the Project, unless such costs and expenses are the
responsibility of Tenant as provided in Section 27 hereof, in which event
such costs and expenses shall be paid solely by Tenant in accordance with Section 27
hereof; (ix) Landlord’s cost for the repairs and maintenance items set
forth in Section 11.3; (x) overhead and profit increment paid to
Landlord or to subsidiaries or affiliates of Landlord for goods and/or services
in the Project to the extent the same exceeds the costs of such by unaffiliated
third parties on a competitive basis; or any costs included in Operating
Expenses representing an amount paid to any entity related to Landlord which is
in excess of the amount which would have been paid in the absence of such
relationship; (xi) any payments under a ground lease or master lease; (xii) any
costs incurred by Landlord in order to obtain additional or different types of
insurance coverages than carried by Landlord as of the Lease Date (for example,
if Landlord does not carry flood insurance as of the Lease Date, then Operating
Expenses shall not include the cost of same); and (xiii) capital expenditures, improvements
or structural changes made to the Premises, the Building or the Project, other
than those expressly permitted in Section 6.1.1 above; (xiv) management
fees in excess of three percent (3%) of the gross revenues of the Project; and
(xv) capital costs to correct any construction or design defects in the
original construction of the Building or the Project.


 


6.2          Tax Expenses: Tenant shall pay to
Landlord Tenant’s Share of all Tax Expenses applicable to the Project. Prior to
delinquency, Tenant shall pay any and all taxes and assessments levied upon
Tenant’s Property (defined below in Section 10) located or installed in or
about the Premises by, or on behalf of Tenant. To the extent any such taxes or
assessments are not separately assessed or billed to Tenant, then Tenant shall
pay the amount thereof as invoiced by Landlord. Tenant shall also reimburse and
pay Landlord, as Additional Rent, within ten (10) days after demand
therefor, one hundred percent (100%) of (i) any increase in real property
taxes attributable to any and all Alterations (defined below in Section 10),
Tenant Improvements, fixtures, equipment or other improvements of any kind
whatsoever placed in, on or about the Premises for the benefit of, at the
request of, or by Tenant, and (ii) taxes and assessments levied or
assessed upon or with respect to the possession, operation, use or occupancy by
Tenant of the Premises or any other portion of the Project. “Tax Expenses”
means, without limitation, any form of tax and assessment (general, special, supplemental,
ordinary or extraordinary), commercial rental tax, payments under any
improvement bond or bonds, license fees, license tax, business license fee, rental
tax, transaction tax or levy imposed by any authority having the direct or
indirect power of tax (including any governmental, school, agricultural, lighting
or other improvement district) as against any legal or equitable interest of
Landlord in the Premises or Project or any other tax, fee, or excise, however
described, including, but not limited to, any tax imposed in substitution (partially
or totally) of any tax previously included within the definition of Tax
Expenses. “Tax Expenses” shall not include (a) any franchise, estate, inheritance,
net income, or excess profits tax imposed upon Landlord, (b) any penalty
or fee imposed solely as a result of Landlord’s failure to pay Tax Expenses
when due, and (c) any items included as Operating Expenses.


 


6.3          Payment of Expenses: Landlord shall
estimate Tenant’s Share of the Operating Expenses and Tax Expenses for the
calendar year in which the Lease commences. Commencing on the Commencement Date,
one-twelfth (1/12th) of this estimated amount shall be paid by Tenant to
Landlord, as Additional Rent, and thereafter on the first (1st) day of each
month throughout the remaining months of such calendar year. Thereafter, Landlord
may estimate such expenses for each calendar year during the Term of this Lease
and Tenant shall pay one-twelfth (1/12th) of such estimated amount as
Additional Rent on the first (1st) day of each month throughout the Term. Tenant’s
obligation to pay Tenant’s Share of Operating Expenses and Tax Expenses shall
survive the expiration or earlier termination of this Lease.


 


2

















 


6.4          Annual Reconciliation: By June 30th of
each calendar year, Landlord shall furnish Tenant with an accounting of actual
and accrued Operating Expenses and Tax Expenses (“Statement”); provided, failure
by Landlord to give such Statement by such date shall not constitute a waiver
by Landlord of its right to collect any underpayment by Tenant at any time. Within
thirty (30) days of Landlord’s delivery of such Statement, Tenant shall pay to
Landlord the amount of any underpayment. Landlord shall credit the amount of
any overpayment by Tenant toward the next estimated monthly installment(s) falling
due, or if the Term of the Lease has expired, refund the amount of overpayment
to Tenant as soon as possible thereafter. If the Term of the Lease expires
prior to the annual reconciliation of expenses Landlord shall have the right to
reasonably estimate Tenant’s Share of such expenses, and Tenant shall pay any
such underpayment to Landlord within ten (10) days fallowing written
demand. Failure by Landlord to accurately estimate Tenant’s Share of such
expenses or to otherwise perform such reconciliation shall not constitute a
waiver of Landlord’s right to collect any underpayment at any time during the
Term or after the expiration or earlier termination of this Lease, provided
that Tenant shall not be required to pay any such underpayment if Tenant has
not received written notice of such unpaid amount on or before the date twelve
(12) months after the end of the calendar year in which such underpayment
occurred.


 


6.5          Audit: After delivery to
Landlord of at least thirty (30) days prior written notice, Tenant, at its sole
cost and expense through any accountant designated by It, shall have the right
to examine and/or audit the books and records evidencing such expenses for the
previous one (1) calendar year, during Landlord’s reasonable business
hours but not more frequently than once during any calendar year. Tenant may
not compensate any such accountant on a contingency fee basis. The results of
any such audit (and any negotiations between the parties related thereto) shall
be maintained strictly confidential by Tenant and its accounting firm and shall
not be disclosed, published or otherwise disseminated to any other party other
than to Landlord and its authorized agents, except as may be required by law. Landlord
and Tenant each shall use its commercially reasonable efforts to cooperate in
such negotiations and to promptly resolve any discrepancies between Landlord
and Tenant in the accounting of such expenses. If such audit reveals that
Landlord’s determination of Operating Expenses overstated the Operating Expenses
by at least five percent (5%), Landlord shall give Tenant a credit against
future rental amounts for an amount equal to the reasonable cost of the audit (provided
that in no event shall such credit exceed $3,500.00).


 


7.             Utilities and Services


 


Tenant
shall pay the cost of all (i) water, sewer use, sewer discharge fees and
sewer connection fees, gas, electricity, telephone, telecommunications, cabling
and other utilities billed or metered separately to the Premises and (ii) refuse
pickup and janitorial service to the Premises.


 


7.1          Utility Expenses: Tenant shall pay to
Landlord Tenant’s Share of any utility fees, use charges, or similar services provided
to any portion of the Project that are not billed or metered separately to
Tenant or another tenant (collectively, “Utility Expenses”). If Landlord
reasonably determines that Tenant’s Share of Utility Expenses is not
commensurate with Tenant’s use of such services, Tenant shall pay to Landlord
the amount which is attributable to Tenant’s use of the utilities or similar
services, as reasonably estimated and determined by Landlord, based upon
factors such as size of the Premises and intensity of use of such utilities by
Tenant such that Tenant shall pay the portion of such charges reasonably
consistent with Tenant’s use of such utilities and similar services. Tenant shall
also pay Tenant’s Share of any assessments, charges and fees included within
any tax bill for the Lot on which the Premises are situated, including without
limitation, entitlement fees, allocation unit fees and sewer use fees.


 


7.2          Common Area Utility Costs: Tenant shall pay to
Landlord, as Additional Rent, Tenant’s Share of any Common Area utility fees, charges
and expenses (collectively, “Common Area Utility Costs”). Tenant shall pay to Landlord
one-twelfth (1/12th) of the estimated annual amount of Tenant’s Share of the Common Area
Utility Casts on the Commencement Date and thereafter on the first (1st) day of each month
throughout the Term. Any reconciliation thereof shall be substantially in the
same manner as set forth in Section 6.4 above.


 


7.3          Miscellaneous: Tenant acknowledges
that the Premises may become subject to the rationing of utility services or restrictions
on utility use as required by a public utility company, governmental agency or
other similar entity having jurisdiction thereof. Tenant agrees that its
tenancy and occupancy hereunder shall be subject to such rationing restrictions
as may be imposed upon Landlord, Tenant, the Premises, or other portions of the
Project, and Tenant shall in no event be excused or relieved from any covenant
or obligation to be kept or performed by Tenant by reason of any such rationing
or restrictions.


 


8.             Late Charges


 


The
sums and charges set forth in this Section 8  shall be “Additional
Rent”. Tenant acknowledges that late payment (the second (2nd) day
of each month or any time thereafter) of Rent and all other sums due hereunder,
will cause Landlord to incur costs
not contemplated by this Lease. Such
costs may include, without limitation, processing and accounting
charges, and late charges that may be imposed on Landlord by the terms of any
note secured by any encumbrance against the Premises, and late charges and
penalties due to the late payment of real property taxes on the Premises. Therefore,
if any installment of Rent or any other sum payable by Tenant is not received by Landlord within five (5) days of the date due, Tenant shall
promptly pay to Landlord a late charge, as liquidated damages, in an amount
equal to five percent (5%) of such delinquent amount plus interest thereon at ten
percent (10%) per annum for every month or portion thereof that such sums
remain unpaid. Notwithstanding the foregoing, Tenant shall not be obligated to
pay such late charge for the first such late payment in any twelve (12) month
period, provided that such payment is made within three (3) days after notice from Landlord that such amount was not paid when due. If Tenant
delivers to Landlord two (2) checks for which there are not sufficient
funds, Landlord may require Tenant to replace such check with a cashier’s check
for the amount of such check and all other charges payable hereunder. The
parties agree that this late charge and the other charges referenced above
represent a fair and reasonable estimate of the costs that Landlord will incur
by reason of such late payment by Tenant, excluding attorneys’ fees and costs. Acceptance
of any late charge or other charges shall not constitute a waiver by Landlord of Tenant’s Default with respect to the delinquent amount, nor prevent
Landlord from exercising any of the other rights and remedies available to
Landlord for any other Default of Tenant under this Lease.


 


9.            Use of Premises


 


                9.1          Compliance with Laws, Recorded Matters, and Rules and Regulations:
The Premises shall be used solely for the permitted uses specified in the Basic
Lease Information and for no other uses without Landlord’s prior written
consent. Landlord’s consent shall not be unreasonably withheld or delayed so
long as the proposed change in use (i) does not involve the use of
Hazardous Materials other than as expressly permitted under the provisions of Section 27
below, (ii) does not require any additional parking spaces, and (iii) is
compatible and consistent with the other uses then being made in the Project, as
reasonably determined by Landlord. The use of the Premises by Tenant and its
employees, representatives, agents, invitees, licensees, subtenants, customers
or contractors (collectively, “Tenant’s Representatives”) shall be subject to, and
at all times in compliance with, (a) any and all applicable laws, rules, codes,
ordinances, statutes, orders and regulations as same exist from time to time
throughout the Term (collectively, the “Laws”), including without limitation, the
requirements of the Americans with Disabilities Act, a federal law codified at
42 U.S.C. 12101 et seq., including, but not limited to Title III thereof, all
regulations and guidelines related thereto and all requirements of Title 24 of
the State of California (collectively, the “ADA”), (b) any and all instruments,
licenses, restrictions, easements or similar instruments, conveyances or
encumbrances which are at any time required to be made by or given by Landlord
relating to the initial development of the Project and/or the construction, from
time to time, of any additional improvements in the Project, including without
limitation, any Tenant Improvements (collectively, “Development Documents”), (c) any
and all documents, easements, covenants, conditions and restrictions, and similar
instruments, together with any and all amendments and supplements thereto made,
from time to time, each of


 


3

















 


which
has been or hereafter is recorded in any official or public records with
respect to the Premises or any other portion of the Project (collectively, “Recorded
Matters”), and (d) any and all rules and regulations set forth in Exhibit C
hereto, any other reasonable rules and regulations now or hereafter
promulgated by Landlord, and any rules, restrictions and/or
regulations imposed by any applicable owners association or similar entity (collectively,
“Rules and Regulations”). Landlord reserves to itself the right, from time
to time, to grant, without the consent of Tenant, such easements, rights and
dedications that Landlord deems reasonably necessary, and to cause the
recordation of parcel or subdivision maps and/or restrictions, so long as such
easements, rights, dedications, maps and restrictions, as applicable, do not
materially and adversely interfere with Tenant’s operations in the Premises. Tenant
agrees to sign promptly any documents reasonably requested by Landlord to
effectuate any such easements, rights, dedications, maps or restrictions. Tenant
agrees to, and does hereby, assume full and complete responsibility (x) to
ensure that the Premises, including without limitation, the Tenant Improvements,
are in compliance with all applicable Laws throughout the Term and (y) for
the payment of all costs, fees and expenses associated with any modifications, improvements
or other Alterations to the Premises and/or any other portion of the Project occasioned by the
enactment of, or changes to, any Laws arising from Tenant’s particular use of
the Premises or Alterations or other improvements made to the Premises
regardless of when such Laws became effective. Tenant shall have no right to
initiate, submit an application for, or otherwise request, any land use
approvals or entitlements with respect to the Premises or any other portion of
the Project.


 


9.2          Prohibition on Use: Tenant shall not use
the Premises or permit anything to be done in or about the Premises nor keep or
bring anything therein which will increase the existing rate of or affect any
policy of insurance upon the Building or any of its contents, or cause a
cancellation of any insurance policy. No auctions may be conducted in, on or
about any portion of the Premises or the Project without Landlord’s prior
written consent thereto. Tenant shall not do or permit anything to be done in
or about the Premises which will obstruct or interfere with the rights of
Landlord or other tenants or occupants of any portion of the Project. The
Premises shall not be used for any unlawful purpose. Tenant shall not cause, maintain
or permit any private or public nuisance in, on or about any portion of the
Premises or the Project, including, but not limited to, any offensive odors, noises,
fumes or vibrations. Tenant shall not damage or deface or otherwise commit or
suffer to be committed any waste in, upon or about the Premises or any other
portion of the Project. Tenant shall not place or store, nor permit any other
person or entity to place or store, any property, equipment, materials, supplies
or personal property outside of the Premises. Except as otherwise provided in Section 35
of this Lease, Tenant shall not permit any animals, including, but not limited
to, any household pets, to be brought or kept in or about the Premises. Tenant
shall neither install any radio or television antenna, satellite dish, microwave
or other device on the roof or exterior walls of the Building or any other
portion of the Project nor make any penetrations of or to the roof of the
Building, without Landlord’s prior written consent, which may be withheld in
Landlord’s sole discretion. Tenant shall not interfere with radio, telecommunication,
or television broadcasting or reception from or in the Building or elsewhere. Tenant
shall place no loads upon the floors, walls, or ceilings in excess of the
maximum designed load permitted by the applicable Uniform Building Code or
which may damage the Building or outside areas within the Project.


 


10.          Alterations; and Surrender of Premises


 


10.1         Alterations: Tenant shall be
permitted to make, at its sole cost and expense, non-structural Alterations (as
hereinafter defined) to the interior of the Premises without obtaining Landlord’s
prior written consent, provided said Alterations are not part of Tenant’s Wi-Fi
Network (defined hereinbelow), do not affect the Building systems and the cost
of such Alterations does not exceed Thirty Thousand Dollars ($30,000.00) each
job and Sixty Thousand Dollars ($60,000.00) cumulatively each calendar year (individually,
a “Permitted Improvement, and collectively, the “Permitted Improvements”). Tenant,
however, shall first notify Landlord and submit to Landlord a description, including
without limitation, plans and specifications (if applicable) of such Permitted
Improvements so that Landlord may post a Notice of Non-Responsibility on the
Premises, as provided hereinafter. Except for the Permitted Improvements, Tenant
shall neither install any signs, fixtures or improvements, nor make or permit
any other alterations or additions (individually, an “Alteration”, and
collectively, “Alterations”) to the Premises without the prior written consent
of Landlord, which consent shall not be unreasonably withheld so long as any
such Alteration does not affect the Building systems, structural integrity or
structural components of the Premises or Building. If Landlord’s consent is
required and given hereunder to any Alteration proposed by Tenant, Landlord
shall notify Tenant in writing with Landlord’s consent whether any of such
proposed Alterations are required to be removed at the expiration or earlier
termination of this Lease. If any such Alteration is expressly permitted by
Landlord or is a Permitted Improvement, Tenant shall deliver at least ten (10) days
prior written notice to Landlord, from the date Tenant commences construction, sufficient
to enable Landlord to post and record a Notice of Non-Responsibility. Tenant
shall obtain all permits or other governmental approvals prior to commencing
any work and deliver a copy of same to Landlord. All Alterations shall be (i) at
Tenant’s sole cost and expense in accordance with plans and specifications
which have been previously submitted to and approved in writing by Landlord, and
shall be installed by a licensed, insured (and bonded, at Landlord’s option) contractor
(reasonably approved by Landlord) in compliance with all applicable Laws, Development
Documents, Recorded Matters, and Rules and Regulations and (ii) performed
in a good and workmanlike manner and so as not to obstruct access to any
portion of the Project or any business of Landlord or any other tenant. Landlord’s
approval of any plans, specifications or working drawings for Tenant’s
Alterations shall neither create nor impose any responsibility or liability on
the part of Landlord for their completeness, design sufficiency, or compliance
with any Laws. As Additional Rent, Tenant shall reimburse Landlord, within
thirty (30) days after demand, for actual legal, engineering, architectural, planning
and other expenses incurred by Landlord in connection with Tenant’s Alterations.
If Tenant makes any Alterations, Tenant shall carry “Builder’s All Risk”
insurance, in an amount approved by Landlord and such other insurance as
Landlord may require. All such Alterations shall be insured by Tenant in
accordance with Section 12 of this Lease immediately upon completion. Tenant
shall keep the Premises and the Lot on which the Premises are situated free
from any liens arising out of any work performed, materials furnished or
obligations incurred by or on behalf of Tenant. Tenant shall, prior to
commencing any Alterations, (a) cause its contractor(s) and/or major subcontractor(s) to
provide insurance as reasonably required by Landlord, and (b) provide such
assurances to Landlord, including without limitation, waivers of lien, as
Landlord shall require to assure payment of the costs thereof to protect
Landlord and the Project from and against any mechanic’s, materialmen’s or
other liens.


 


                                10.1.1     Wi-Fi Network: Without limiting the generality of the foregoing, in
the event Tenant desires to install wireless intranet, Internet and communications
network (“Wi-Fi Network”) in the Premises for the use by Tenant and its
employees, then the same shall be subject to the provisions of this Section 10.1.1
(in addition to the other provisions of this Section 10). Tenant shall, in
accordance with Section 10.2 below, remove the Wi-Fi Network
from the Premises prior to the termination of the Lease. Tenant shall use the Wi-Fi
Network so as not to cause any interference to other tenants in the Building or
to other tenants at the Park or with any other tenant’s communication equipment,
and not to damage the Building or Park or interfere with the normal operation
of the Building or Park and Tenant hereby agrees to indemnify, defend and hold
Landlord harmless from and against any and all claims, costs, damages, expenses
and liabilities (including attorneys’ fees) arising out of Tenant’s failure to
comply with the provisions of this Section 10.1.1, except to the extent
same is caused by the gross negligence or willful misconduct or Landlord and
which is not covered by the insurance carried by Tenant under this Lease (or
which would not be covered by the insurance required to be carried by Tenant
under this Lease). For the purposes of this Section 10.1.1, interference
shall be defined to mean interference in violation of the rules and
regulations of the Federal Communications Commission (“FCC”). Should any
interference occur, Tenant shall take all
necessary steps as soon as reasonably possible and no later than three (3) calendar
days following written notice to correct such interference. If such
interference continues after such three (3) day period, Tenant shall
immediately cease operating such Wi-Fi Network until such interference is
corrected or remedied to be in compliance with the rules and regulations
of the FCC. Tenant acknowledges that Landlord has granted and/or may grant telecommunication rights to other tenants and occupants of
the Building and to telecommunication service providers and in no event shall
Landlord be liable to Tenant for any interference of the same with such Wi-Fi
Network, Landlord makes no representation that the Wi-Fi Network will be able
to receive or transmit communication signals without interference or
disturbance. Tenant shall (i) be solely responsible for any damage caused as
a result of the Wi-Fi Network, (ii) promptly


 


4

















 


pay
any tax, license or permit fees charged pursuant to any laws or regulations in connection
with the installation, maintenance or use of the Wi-Fi Network and comply with
all precautions and safeguards recommended by all governmental authorities, and
(iii) pay for all necessary repairs, replacements to or maintenance of the
Wi-Fi Network.


 


10.2        Surrender of Premises: At the expiration
of the Term or earlier termination of this Lease, Tenant shall surrender the
Premises to Landlord (a) in good condition and repair (damage by acts of
God, casualty, and ordinary wear and tear excepted), but with all interior
walls cleaned, any carpets cleaned, all floors cleaned and waxed, all
non-working light bulbs and ballasts replaced and all roll-up doors and
plumbing fixtures in good condition and working order, and (b) in
accordance with Section 27 hereof. The term “ordinary wear and tear” shall
not include any damage or deterioration that could have been prevented by
Tenant’s employment of ordinary prudence, care and diligence in the occupancy
and use of the Premises and the performance of all of its obligations under
this Lease. Items not considered ordinary wear and tear hereunder include the
following for which Tenant shall bear the obligation for repair and restoration:
(i) excessively soiled, stained, worn or marked surfaces or finishes; (ii) damage,
including holes in building surfaces (e.g., cabinets, doors, walls, ceilings
and floors) caused by the Installation or removal of Tenant’s trade fixtures, furnishings,
decorations, equipment, alterations, utility installations, security systems, communication
systems (including cabling, wiring and conduits), displays and signs; (iii) damage
to any component, fixture, hardware, system or component part thereof within
the Premises, and any such damage to the Building caused by Tenant or its
agents, contractors or employees, and not fully recovered by Landlord from
insurance proceeds. On or before the expiration or earlier termination of this
Lease, Tenant shall remove (i) all of Tenant’s Property (defined below) and
Tenant’s signage from the Premises and other portions of the Project, (ii) any
Alterations that Landlord has, by notice to Tenant given with Landlord’s
written consent to such Alterations, advised Tenant that removal is required; provided,
however, in the event that Landlord’s consent was not required to be obtained
pursuant to Section 10.1 hereof and Landlord did not otherwise notify
Tenant in writing prior to Tenant’s installation of any such Permitted
Alteration that removal would not be required, then Landlord shall have the
right to notify Tenant, not later than ninety (90) days prior to the Expiration
Date (except in the event of a termination of this Lease prior to the scheduled
Expiration Date, in which event no advance notice shall be required), that
Tenant shall be required, at Tenant’s expense, to remove such Alterations, and
Tenant shall repair any damage caused by all of such removal activities; provided,
however, that Tenant shall not be required to remove (x) the Tenant
Improvements (excluding the Initial Cabling (as defined in Exhibit B),
which shall be subject to the provisions of this Section 10.2 relating to
Cabling) or (y) any cabling (excluding the Initial Cabling) Which exists in
the Premises prior to the Commencement Date, “Tenant’s Property” means all
equipment, trade fixtures, furnishings, all telephone, data, and other cabling
and wiring (including any cabling and wiring associated with the Wi-Fi Network,
if any) installed or caused to be installed by Tenant (including any cabling
and wiring, installed above the ceiling of the Premises or below the floor of
the Premises), inventories, goods and personal property of Tenant. Any of
Tenant’s Property not so removed by Tenant as required herein shall be deemed
abandoned and may be stored, removed, and disposed of by Landlord at Tenant’s
expense, and Tenant waives all claims against Landlord for any damages
resulting from Landlord’s retention and disposition of such property; provided,
however, Tenant shall remain liable to Landlord for all costs incurred in
storing and disposing of such abandoned property of Tenant. Landlord may elect
to take responsibility to remove any such wiring or cabling installed above the
ceiling or beneath the floors of the Premises, in which case Tenant shall pay
Landlord for the actual cost Incurred by Landlord therefor, within thirty (30) days
after being billed for the same. Notwithstanding anything to the contrary
contained herein, Tenant shall prior to the expiration of this Lease, at Tenant’s
expense and in compliance with the National Electric Code and other applicable
Laws, remove all electronic, fiber, phone and data cabling and related
equipment that has been installed by or for the benefit of Tenant in or around
the Premises (collectively, the “Cabling”); provided, however, Tenant shall not
remove such Cabling if Tenant receives a written notice from Landlord at least
fifteen (15) days prior to the expiration of the Lease authorizing such Cabling
to remain in place, in which event the Cabling shall be surrendered with the
Premises upon the expiration or earlier termination of this Lease, All
Alterations except those which Landlord requires Tenant to remove shall remain
in the Premises as the property of Landlord. If the Premises are not
surrendered at the expiration of the Term or earlier termination of this Lease,
and in accordance with this Section 10 and Section 27 below, Tenant
shall continue to be responsible for the payment of Rent (as the same may be
increased pursuant to Section 20 below) until the Premises are so
surrendered in accordance with said provisions. Tenant shall indemnify, defend
and hold the Indemnitees (hereafter defined) harmless from and against any and
all Claims (defined below) (A) arising from any delay by Tenant in so
surrendering the Premises including, without limitation, any Claims made
against Landlord by any succeeding tenant or prospective tenant founded on or
resulting from such delay and (B) suffered by Landlord due to lost
opportunities to lease any portion of the Premises to any such succeeding
tenant or prospective tenant.


 


11.          Repairs and Maintenance


 


               11.1         Tenant’s Repairs and Maintenance
Obligations: Except for those portions of the Building to be maintained by Landlord, as
provided in Sections 11.2 and 11.3 below, Tenant shall, at its sole cost and
expense, keep and maintain all parts of the Premises and such portions of the
Building as are within the exclusive control of Tenant in good, clean and safe
condition and repair, promptly making all necessary repairs and replacements, whether
ordinary or extraordinary, with materials and workmanship of the same character,
kind and quality as the original thereof, all of the foregoing in accordance
with the applicable provisions of Section 10 hereof, and to the reasonable
satisfaction of Landlord including, but not limited to, repairing any damage (and
replacing any property so damaged) caused by Tenant or any of Tenant’s
Representatives, or due to or associated with unusually heavy people loads (defined
as more than one person per two hundred (200) rentable square feet), unusually
heavy utility use, unusually heavy floor loads, or other unusual occupancy
factors, and restoring the Premises and other portions of the Project to the
condition existing prior to the occurrence of such damage. Without limiting any
of the foregoing, Tenant shall be solely responsible for promptly maintaining, repairing
and replacing (a) all mechanical systems, heating, ventilation and air
conditioning systems exclusively serving the Premises, unless maintained by
Landlord, (b) all plumbing work and fixtures in the Premises, (c) electrical
wiring systems, fixtures and equipment exclusively serving the Premises, (d) all
interior lighting (Including, without limitation, light bulbs and/or ballasts) and
exterior lighting exclusively serving the Premises, (e) all glass, windows,
window frames, window casements, skylights, interior and exterior doors, door
frames and door closers within the Premises, (f) all roll-up doors, ramps
and dock equipment, including without limitation, dock bumpers, dock plates, dock
seals, dock levelers and dock lights within the Premises or on the exterior of
the Premises, (g) all Tenant signage, (h) lifts for disabled persons
exclusively serving the Premises, (i) sprinkler systems, fire protection
systems and security systems within the Premises, except to the extent
maintained by Landlord, and (j) all partitions, fixtures, equipment, interior
painting, interior walls and floors, and floor coverings of the Premises and
every part thereof (including, without limitation, any demising walls
contiguous to any portion of the Premises). Any such work shall be performed by
licensed, insured and bonded contractors and subcontractors reasonably approved
by Landlord. Additionally, Tenant shall be solely responsible for the
performance of the regular removal of trash and debris. Tenant’s maintenance
and repair obligations pursuant to Section 11.1(a) above shall
include the procurement and maintenance of a heating, ventilation and air
conditioning systems preventative maintenance and repair contract(s) for
any HVAC unit(s) exclusively servicing the Premises; such contract(s) to
provide for maintenance on a quarterly basis. Landlord reserves the right, but
without the obligation to do so, to procure and maintain the heating, ventilation
and air conditioning systems preventative maintenance and repair contract(s) and,
if Landlord so elects to procure and maintain any such contract(s), Tenant will
reimburse Landlord for the cost thereof in accordance with the provisions of Section 6
above, provided that the cost of such contract is commercially reasonable. If
Tenant procures and maintains any of such contract(s), Tenant will promptly
deliver to Landlord a true and complete copy of each such contract and any and
all renewals or extensions thereof, and each service report or other summary
received by Tenant pursuant to or in connection with such contract(s). Upon
prior written notice to Landlord, Tenant shall be permitted to access the roof of the Premises to the
extent necessary to service the HVAC pursuant to Tenant’s HVAC maintenance and
repair contract.


 


11.2        Maintenance by Landlord: Subject to the
provisions of Section 11.1, and further subject to Tenant’s obligation


 


5

















 


under
Section 6 to reimburse Landlord, in the form of Additional Rent, for
Tenant’s Share of the cost and expense of the following described items, Landlord
shall repair and maintain the following items: fire protection services; the
roof coverings and membrane (provided that Tenant installs no additional air
conditioning or other equipment on the roof that damages the roof coverings, in
which event Tenant shall pay all costs relating to the presence of such
additional equipment) and non-structural portions of the roof; the plumbing and
mechanical systems serving the Building, excluding the plumbing, mechanical and
electrical systems exclusively serving the Premises; any rail spur and rail
crossing; exterior painting of the Building; and the parking areas, pavement, landscaping,
sprinkler systems, sidewalks, driveways, curbs, and lighting systems in the
Common Areas. If Landlord elects to perform any repair or restoration work
required to be performed by Tenant, Tenant shall reimburse Landlord within
thirty (30) days of demand for all costs and expenses incurred by Landlord in
connection therewith. Tenant shall promptly report, in writing, to Landlord any
defective condition known to it which Landlord is required to repair.


 


11.3         Landlord’s Repairs and
Maintenance Obligations: Subject to the provisions of Sections 11.1, 25 and
26, and except for repairs rendered necessary by the intentional or negligent
acts or omissions of Tenant or any of Tenant’s Representatives, Landlord shall,
at Landlord’s sole cost and expense, keep in good repair the structural
portions of the roof, floors, foundations and exterior perimeter walls of the
Building (exclusive of glass and exterior doors).


 


11.4         Tenant’s Failure to Perform
Repairs and Maintenance Obligations: If Tenant refuses or neglects to repair and
maintain the Premises and the other areas properly as required herein and to
the reasonable satisfaction of Landlord, (i) Landlord may, but without
obligation to do so, at any time make such repairs or maintenance without
Landlord having any liability to Tenant for any loss or damage that may accrue
to Tenant’s Property or to Tenant’s business by reason thereof, except to the
extent any damage is caused by the willful misconduct or gross negligence of
Landlord or its authorized agents and representatives and (ii) Tenant shall pay
to Landlord, as Additional Rent, Landlord’s costs and expenses incurred
therefor. Tenant’s obligations under this Section 11 shall survive the
expiration of the Term or earlier termination thereof. Tenant hereby waives any
right to repair at the expense of Landlord under any applicable Laws now or
hereafter in effect.


 


12.          Insurance


 


12.1         Types of Insurance: Tenant shall
maintain in full force and effect at all times during the Term, at Tenant’s
sole cost and expense, for the protection of Tenant and Landlord, as their
interests may appear, policies of insurance issued by carriers reasonably
acceptable to Landlord and its lender which afford the following coverages: (i) worker’s
compensation and employer’s liability, as required by law; (ii) commercial
general liability insurance (occurrence form) providing coverage against any
and all claims for bodily injury and property damage occurring in, on or about
the Premises arising out of Tenant’s and Tenant’s Representatives’ use or occupancy
of the Premises and such insurance shall (a) include coverage for blanket
contractual liability, fire damage, premises, personal injury, completed
operations and products liability and with respect to completed operations and
products, a $1,000,000 aggregate, and (b) have a combined single limit of
not less than Two Million Dollars ($2,000,000) per occurrence and a Three
Million Dollar ($3,000,000) aggregate limit and excess/umbrella insurance in
the amount of at least Three million Dollars.,($3,000,000); (iii) comprehensive
automobile liability insurance with a combined single limit of at least
$1,000,000 per occurrence for claims arising out of any company owned
automobiles; (iv) “all risk” or “special purpose” property insurance, including
without limitation, sprinkler leakage, covering damage to or loss of any of
Tenant’s Property and the Tenant Improvements located in, on or about the
Premises, together with, if the property of any of Tenant’s invitees, vendors
or customers is to be kept in the Premises, warehouser’s legal liability or ballee
customers insurance for the full replacement cost of the property belonging to
such parties and located in the Premises. Such insurance shall be written on a
replacement cost basis (without deduction for depreciation) in an amount equal
to one hundred percent (100%) of the full replacement value of the aggregate of
the items referred to in this clause (iv); (v) employers liability with
limits of $1,000,000 each accident, $1,000,000 disease policy limit, $1,000,000
disease-each employee; (vi) business interruption insurance with limit of
liability representing loss of at lease approximately six (6) months of
income; and (vii) such other insurance or higher limits of liability as is
then customarily required for similar types of buildings within the general
vicinity of the Project or as may be reasonably required by any of Landlord’s
renders.


 


12.2         Insurance Policies: Insurance required
to be maintained by Tenant shall be written by companies (i) licensed to do
business in the State of California, (ii) domiciled in the United States of America,
and (iii) having a “General Policyholders Rating” of at least A-:_VIII (or
such higher rating as may be required by a lender having a lien on the Premises)
as set forth in the most current issue of “A.M. Best’s Rating Guides.” Any
deductible amounts under any of the insurance policies required hereunder shall
not exceed Ten Thousand Dollars ($10,000). Tenant shall deliver to Landlord
certificates of insurance and true and complete copies of any and all
endorsements required herein for all insurance required to be maintained by
Tenant hereunder at the time of execution of this Lease by Tenant. Tenant shall,
at least ten (10) days prior to expiration of each policy, furnish
Landlord with certificates of renewal or “binders” thereof. Each certificate
shall expressly provide that such policies shall not be cancelable or otherwise
subject to material modification except after thirty (30) days prior written
notice to the parties named as additional insureds as required in this Lease (except
for cancellation for nonpayment of premium, in which event cancellation shall
not take effect until at least ten (10) days’ notice has been given to
Landlord). Tenant shall have the right to provide insurance coverage which it is
obligated to carry pursuant to the terms of this Lease under a blanket
insurance policy, provided such blanket policy expressly affords coverage for
the Premises and Landlord as required by this Lease.


 


12.3         Additional Insureds and
Coverage: Each of landlord, Landlord’s property management company or agent, and Landlord’s
lender(s) having a lien against the Premises or any other portion of the
Project shall be named as additional insureds or loss payees (as applicable) under
all of the policies required in Section 12.1(ii) and, with respect to
the Tenant Improvements, in Section 12.1(iv) hereof. All such
policies shall provide for severability of interest. All insurance to be
maintained by Tenant shall, except for workers’ compensation and employer’s
liability insurance, be primary, without right of contribution from insurance maintained by Landlord. Any umbrella/excess
liability policy (which shall be in “following form”) shall provide that if the
underlying aggregate is exhausted, the excess coverage will drop down as
primary insurance. The limits of insurance maintained by Tenant shall not limit
Tenant’s liability under this Lease, It Is the parties’ intention that the insurance
to be procured and maintained by Tenant as required herein shall provide
coverage for any and all damage or injury arising from or related to Tenant’s
operations of its business and/or Tenant’s or Tenant’s Representatives’ use of
the Premises and any of the areas within the Project. Notwithstanding anything
to the contrary contained herein, to the extent Landlord’s cost of maintaining
insurance with respect to the Building and/or any other buildings within the
Project is increased as a result of Tenant’s acts, omissions, Alterations, improvements,
use or occupancy of the Premises, Tenant shall pay one hundred percent (100%) of,
and for, each such increase as Additional Rent.


 


                12.4        Failure of Tenant to Purchase
and Maintain Insurance: If Tenant fails to obtain and maintain the insurance
required herein throughout the Term, Landlord may, but without obligation to do
so, purchase the necessary insurance and pay the premiums therefor. If Landlord
so elects to purchase such insurance, Tenant shall promptly pay to Landlord as
Additional Rent, the amount so paid by Landlord, upon Landlord’s demand
therefor. In addition, Landlord may recover from Tenant and Tenant agrees to
pay, as Additional Rent, any and all Claims which Landlord may incur due to
Tenant’s failure to obtain and maintain such insurance.


 


12.5         Waiver of Subrogation: Landlord and Tenant
mutually waive their respective rights of recovery against each other for any
loss of, or damage to, either parties’ property to the extent that such loss or
damage is insured by an insurance policy required to be in effect at the time
of such loss or damage. Each party shall obtain any special endorsements, if
required by its insurer, whereby the insurer waives its rights of subrogation
against the other party. This provision is intended to waive fully, and for the
benefit of the parties hereto, any rights and/or claims which might give rise
to a right of subrogation in favor of any insurance carrier.


 


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The
foregoing waiver shall not apply to losses or damages in excess of actual or
required policy limits (whichever is greater) nor to any deductible applicable
under any policy obtained by the waiving party. The failure of either party (the
“Defaulting Party”) to take out or maintain any insurance policy required under
this Lease shall be a defense to any claim asserted by the Defaulting Party against
the other party hereto by reason of any loss sustained by the
Defaulting Party that would have been covered by any such required policy. The
waivers set forth in the immediately preceding sentence shall be in addition to,
and not in substitution for, any other waivers, indemnities, or exclusions of
liabilities set forth in this lease.


 


13.          Limitation of Liability and Indemnity


 


Except
to the extent of Claims (defined below) resulting from the gross negligence or
willful misconduct of Landlord or its authorized representatives, Tenant agrees
to protect, defend (with counsel reasonably acceptable to Landlord) and hold
Landlord and Landlord’s lenders, partners, members, property management company
(if other than Landlord), agents, directors, officers, employees, representatives,
contractors, successors and assigns and each of their respective partners, members,
directors, officers, employees, representatives, agents, contractors, heirs, successors
and assigns (collectively, the “Indemnitees”) harmless and indemnify the
Indemnitees from and against all liabilities, damages, demands, penalties, costs,
claims, losses, judgments, charges and expenses (including reasonable attorneys’
fees, costs of court and expenses necessary in the prosecution or defense of any
litigation including the enforcement of this provision) (collectively, “Claims”)
arising from or in any way related to, directly or indirectly, (i) Tenant’s
or Tenant’s Representatives’ use of the Premises and other portions of the
Project, (ii) the conduct of Tenant’s business, (iii) from any activity, work
or thing done, permitted or suffered by Tenant in or about the Premises, and/or
(iv) Tenant’s failure to perform any covenant or obligation of Tenant. Tenant
agrees that the obligations of Tenant herein shall survive the expiration or
earlier termination of this Lease.


 


Except
to the extent of Claims resulting from the gross negligence or willful
misconduct of any Indemnitee, to the fullest extent permitted by law, neither
Landlord nor any other Indemnitee shall be liable for damages to Tenant or any
party claiming through Tenant for any injury to or death of any person or
damage to property or for interruption or damage to business resulting from any
of the following reasons: (a) any act, omission or negligence of Tenant or
Tenant’s Representatives; (b) any act, omission or negligence of any other
tenant within the Building, or any of their respective employees, agents, contractors,
tenants, assignees, licensees, invitees or customers; (c) the repair, alteration,
maintenance, damage or destruction of the Premises or any other portion of the
Building (including the construction of leasehold improvements for other
tenants of the Building), except to the extent caused by the gross negligence
or willful misconduct of Landlord or any other Indemnitee; (d) vandalism, theft,
burglary and other criminal acts (other than those committed by Landlord’s
employees); (e) any defect in or failure of equipment, pipes, wiring, heating
or air conditioning equipment, stairs, elevators, or sidewalks, the bursting of
any pipes or the leaking, escaping or flowing of gas, water, steam, electricity,
or oil, broken glass, or the backing up of any drains, except to the extent
caused by the gross negligence or willful misconduct of Landlord or any other
Indemnitee; (f) injury done or occasioned by wind, snow, rain or ice, fire,
act of God, public enemy, injunction, riot, strike, insurrection, war, court
order, requisition, or order of any governmental body or authority, (g) any
other cause beyond the reasonable control of Landlord or (h) the passive or active negligence of any Indemnitee. Under no circumstances shall
Landlord or any other Indemnitee be liable for damages related to business
Interruption or loss of profits. The provisions of this Section 13 shall
not limit the obligations of Landlord or the rights of Tenant under this Lease
not involving a claim for damages.


 


14.          Assignment and Subleasing


 


14.1         Prohibition: Tenant shall not, without
the prior written consent of Landlord, assign, mortgage, hypothecate, encumber,
grant any license or concession, pledge or otherwise transfer this Lease or any
interest herein, permit any assignment or other transfer of this Lease by
operation of law, sublet the Premises or any part thereof, or permit the use of
the Premises by any persons other than Tenant and Tenant’s Representatives (collectively,
”Transfers” and any entity to whom any Transfer is made or sought to be made is
sometimes referred to as a “Transferee”). No consent to any Transfer shall
constitute a waiver of the provisions of this Section 14. All Transfers
shall be made only with the prior written consent of Landlord, which consent
shall not be unreasonably withheld, conditioned or delayed, but which consent
shall be subject to the provisions of this Section 14.


 


14.2         Request for Consent: If Tenant seeks to
make a Transfer, Tenant shall notify Landlord, in writing (“Tenant’s Notice), and
deliver to Landlord at least fifteen (15) days prior to the proposed
commencement date of the Transfer (“Proposed Effective Date”) the following: (i) a
description of the portion of the Premises to be transferred (the “Subject
Space”); (ii) all of the terms of the proposed Transfer, including without
limitation, the Proposed Effective Date, the name and address of the proposed
Transferee, and a copy of the existing or proposed assignment, sublease or
other agreement governing the proposed Transfer; (iii) current financial statements of the proposed Transferee
certified by an officer, member, partner or owner thereof, and audited
financial statements for the previous three (3) most recent consecutive
fiscal years; and (iv) such other information as Landlord may then
reasonably require. Within fifteen (15) days after Landlord’s receipt of the
Tenant’s Notice (the “Landlord Response Period”) Landlord shall notify Tenant, in
writing, of its  determination with respect to such
requested proposed Transfer and Landlord’s election as set forth in Section 14.5. If Landlord does not elect to
recapture pursuant to Section 14.5 and Landlord does consent to the
requested proposed Transfer, Tenant may thereafter assign its interests in and
to this Lease or sublease all or a portion of the Premises to the same party
and on the same terms as set forth in the Tenant’s Notice.


 


14.3         Criteria for Consent: Tenant agrees that, among
other circumstances for which Landlord could reasonably withhold consent to a
proposed Transfer, it shall be reasonable for Landlord to withhold its consent
where (a) Tenant is in Default of its obligations under this Lease beyond
applicable notice and cure periods or at any time during the Term of this Lease
Tenant has been in Chronic Default, (b) the use to be made of the Premises
by the proposed Transferee is prohibited, or differs from the uses permitted, under
this Lease, (c) the proposed Transferee or its business is subject to
compliance with additional requirements of the ADA beyond those requirements
which are applicable to Tenant, (d) the proposed Transferee does not
intend to occupy the Premises, (e) Landlord reasonably disapproves of the
proposed Transferee’s business operating ability or history, or
creditworthiness, (f) the proposed Transferee is a governmental agency or
unit or an existing tenant in the Project, (g) the proposed Transfer would
cause Landlord to violate another agreement or obligation to which Landlord is
a party or otherwise subject, or (h) the proposed Transferee will use, store
or handle Hazardous Materials (defined below) of a type, nature or quantity not
then being used by Tenant.


 


               14.4         Effectiveness of Transfer and
Continuing Obligations: Prior to the date on which any permitted Transfer becomes
effective, Tenant shall deliver to Landlord (i) a counterpart of the fully
executed Transfer document, (ii) an executed Hazardous Materials
Disclosure Certificate substantially in the form of Exhibit D hereto (the
“Transferee HazMat Certificate”), and (iii) Landlord’s standard form of Consent
to Assignment or Consent to Sublease, as applicable, executed by Tenant and the
Transferee in which each of Tenant and the Transferee confirms its obligations
under this Lease. Failure or refusal of a Transferee to execute any such
consent instrument shall not release or discharge the Transferee from its
obligation to do so or from any liability as provided herein. The voluntary, involuntary
or other surrender of this Lease by Tenant, or a mutual cancellation by
Landlord and Tenant, shall not work a merger, and any such surrender or
cancellation shall, at the option of Landlord, either terminate all or any
existing subleases or operate as an assignment to Landlord of any or all of
such subleases. Each permitted Transferee shall assume and be deemed to assume
this Lease and shall be and remain liable jointly and severally with Tenant for
payment of Rent and for the due performance of, and compliance with all the
terms, covenants, conditions and agreements herein contained on Tenant’s part
to be performed or complied with, for the Term of this Lease. No Transfer shall
affect the continuing primary liability of Tenant (which, following assignment,
shall be joint and several with the assignee) under this Lease whether
occurring before or after such Transfer, and Tenant shall not be released from
performing any of the terms, covenants and conditions of this Lease. An
assignee of Tenant shall become directly liable to Landlord for all obligations
of Tenant hereunder. The acceptance of any Rent by Landlord from any other


 


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person
(whether or not such person is an occupant of the Premises) shall not be deemed
to be a waiver by Landlord of any provision of this Lease or to be a consent to
any Transfer. For purposes hereof, if Tenant is a business entity, direct or
Indirect transfer of fifty percent (50%) or more of the ownership interest of
the entity (whether in a single transaction or in the  aggregate through more than one transaction) shall
be deemed a Transfer and shall
be subject to this Section 14. Any and all options, rights of refusal, improvement
allowances and other similar rights granted to Tenant in this Lease, if any, shall
not be assignable by Tenant unless expressly authorized in writing by Landlord.
Any transfer made without Landlord’s prior written consent, shall, at Landlord’s
option, be null, void and of no effect, and shall, at Landlord’s option, constitute
a material default by Tenant of this Lease. As Additional Rent, Tenant shall
promptly reimburse Landlord for actual legal and other expenses incurred by
Landlord in connection with any actual or proposed Transfer.


 


14.5        Recapture: If the Transfer (i) by
itself or taken together with then existing or pending Transfers covers or
totals, as the case may be, more than fifty percent (50%) of the rentable
square feet of the Premises, and (ii) is for a term which by itself or
taken together with then existing or pending Transfers is greater than fifty
percent (50%) of the period then remaining in the Term of this Lease as of the
time of the Proposed Effective Date, then Landlord shall have the right, to be
exercised by giving written notice to Tenant, to recapture the Subject Space
described in the Tenant’s Notice. If such recapture notice is given, it shall
serve to terminate this Lease with respect to the proposed Subject Space, or, if
the proposed Subject Space covers all the Premises, it shall serve to terminate
the entire Term of this Lease, in either case, as of the Proposed Effective
Date. If this Lease is terminated with respect to less than the entire Premises,
Rent shall be adjusted on the basis of the proportion of rentable square feet
retained by Tenant to the rentable square feet originally demised and this
Lease as so amended shall continue thereafter in full force and effect.


 


14.6        Transfer Premium: If Landlord consents
to a Transfer, as a condition thereto, Tenant shall pay to Landlord monthly, as
Additional Rent, at the same time as the monthly Installments of Rent are
payable hereunder, fifty percent (50%) of any Transfer Premium. The term “Transfer
Premium” shall mean all rent, additional rent and other consideration payable
by such Transferee which either initially or over the term of the Transfer
exceeds the Rent or pro rata portion of the Rent, as the case may be, for the
Subject Space, after first deducting commercially reasonable commissions, reasonable
attorneys’ fees and tenant improvement allowance(s) incurred in connection with
the procurement of the Transfer (collectively, “Transfer Costs”); provided,
such Transfer Costs, in the case of a Transfer that is a sublease, shall be
deducted in equal monthly installments from the monthly Rent due over the term
of the sublease.


 


14.7        Waiver: Notwithstanding any
Transfer, or any indulgences, waivers or extensions of time granted by Landlord
to any Transferee, or failure by Landlord to take action against any Transferee,
Tenant agrees that Landlord may, at its option, proceed against Tenant without
having taken action against or joined such Transferee, except that Tenant shall
have the benefit of any indulgences, waivers and extensions of time granted to
any such Transferee.


 


14.8        Affiliates. The assignment or
subletting by Tenant of all or any portion of this Lease or the Premises to (i) a
parent or subsidiary of Tenant, or (ii) any person or entity which
controls, is controlled by or under the common control with Tenant, or (iii) any
entity which purchases all or substantially all of the assets of Tenant, or (iv) any
entity into which Tenant is merged or consolidated (all such persons or
entities described in clauses (i), (ii), (iii) and (iv) being sometimes
herein referred to as “Affiliates”) shall not be subject to obtaining Landlord’s
prior consent or a recapture and no Transfer Premium shall be payable, provided
in all instances that:


 


(a)           No Default then exists under this Lease;


 


(b)           Any such Affiliate was not formed as a
subterfuge to avoid the obligations of this Section 14;


 


(c)           Tenant gives Landlord prior notice of any such
Transfer to an Affiliate at least fifteen (15) days prior to the effective date
of the proposed Transfer (unless such Transfer is not disclosed to the public, then
upon such disclosure to the public);


 


(d)           the successor of Tenant shall have, as of the
effective date of any such Transfer, a tangible net worth and net assets, in
the aggregate, computed in accordance with generally accepted accounting
principles (but excluding goodwill as an asset), which is sufficient to meet
the obligations of Tenant under this Lease, as reasonably determined by
Landlord;


 


(e)           any such Transfer shall be subject to all of
the terms and provisions of this Lease, and such proposed Transferee (i.e. any
such Affiliate), other than in the case of an Affiliate resulting from a merger
or consolidation described in Section 14.8(iv) above, shall assume, in
a written document reasonably satisfactory to Landlord and delivered to
Landlord upon or prior to the effective date of such assignment or sublease, all
the obligations of Tenant under this Lease;


 


(f)            Tenant and any
guarantor shall remain fully liable for all obligations to be performed by
Tenant under this Lease; and


 


(g)           Tenant’s notice to Landlord shall include
information and documentation showing that each of the above conditions has
been satisfied. If requested by landlord, Tenant’s successor shall sign a
commercially reasonable form of assumption agreement.


 


15.          Subordination


 


To
the fullest extent permitted by law, this Lease, the rights of Tenant under
this Lease and Tenant’s leasehold interest shall be subject and subordinate at
all times to: (i) all ground leases
or underlying leases which may now exist or hereafter be executed affecting the
Building, the Lot, or any other portion of the Project, and (ii) the lien
of any mortgage or deed of trust which may now or hereafter exist for which the Building, the Lot, ground
leases or underlying leases, any other portion of the Project or Landlord’s
interest or estate therein is specified as security, provided, however, that
any such subordination to any subsequent ground lease, underlying lease, mortgage
or deed of trust shall be conditioned upon the ground lessor, mortgagee or
beneficiary executing a commercially reasonable non-disturbance agreement in
favor of Tenant. Notwithstanding the foregoing, Landlord or any such ground
lessor, mortgagee, or any beneficiary shall have the right to require this
Lease be superior to any such ground leases or underlying leases or any such
liens, mortgage or deed of trust. If any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a conveyance in lieu of foreclosure is made for any
reason, Tenant shall attorn to and become the Tenant of the successor in interest
to Landlord, provided such successor in interest will not disturb Tenant’s use,
occupancy or quiet enjoyment of the Premises if Tenant is not in Default of
this Lease. The successor in interest to Landlord following foreclosure, sale
or deed in lieu thereof shall not be: (a) liable for any act or omission
of any prior lessor or with respect to events occurring prior to acquisition of
ownership; (b) subject to any offsets or defenses which Tenant might have
against any prior lessor; (c) bound by prepayment of more than one (1) month’s
Rent; or (d) liable to Tenant for any Security Deposit not actually
received by such successor in interest to the extent any portion of such
Security Deposit has not already been  forfeited by, or refunded to, Tenant. If
Landlord receives a Security Deposit, Landlord shall be liable to Tenant for
all or any portion of the Security Deposit not forfeited by, or refunded to
Tenant, until and unless Landlord transfers such Security Deposit to the
successor in interest. Tenant covenants and agrees to execute (and acknowledge
if required by Landlord, any lender or ground lessor) and deliver, within ten (10) business
days of a written demand or request by Landlord and in the form reasonably
requested by Landlord, ground lessor, mortgagee or beneficiary, any additional


 


8














 


documents
evidencing the priority or subordination of this Lease with respect to any such
ground leases or underlying leases or the lien of any such mortgage or deed of
trust, provided that such documents include a provision whereby such ground
lessor, mortgagee or beneficiary agrees that it shall not disturb Tenant’s use,
occupancy or quiet enjoyment of the Premises if Tenant is not in Default of
this Lease.


 


16.          Right of
Entry


 


Landlord
and its agents shall have the right to enter the Premises at all reasonable
times, upon reasonable prior notice, for purposes of inspection, exhibition, posting
of notices, investigation, replacements, repair, maintenance and alteration. It
is further agreed that Landlord shall have the right to use any and all means
Landlord deems necessary to enter the Premises in an emergency. Landlord shall
have the right to place (i) “for rent” or “for lease” signs on the outside
of the Premises, the Building and in the Common Areas, and (ii) “for sale”
signs on the outside of the Building and in the Common Areas. Tenant hereby
waives any Claim from damages or for any injury or inconvenience to or
interference with Tenant’s business, or any other loss occasioned thereby
except for any Claim for any of the foregoing arising out of the sole active
gross negligence or willful misconduct of Landlord or its authorized
representatives.


 


17.          Estoppel
Certificate


 


Tenant
shall execute (and acknowledge if required by any lender or ground lessor) and
deliver to Landlord, within ten (10) business days after Landlord provides
such to Tenant, a statement in writing certifying that this Lease is unmodified
and in full force and effect (or, if modified, stating the nature of such
modification), the date to which the Rent and other charges are paid in advance,
if any, acknowledging that there are not, to Tenant’s knowledge, any uncured
defaults on the part of Landlord hereunder or specifying such defaults as are
claimed, and such other matters as Landlord may reasonably require. Any such
statement may be conclusively relied upon by Landlord and any prospective
purchaser or encumbrancer of the Building or other portions or the Project. Tenant’s failure to deliver such statement within such time
shall be conclusive upon the Tenant that (a) this Lease is in full force
and effect, without modification except as may be represented by Landlord; (b) there
are no uncured defaults in Landlord’s performance; and (c) not more than
one month’s Rent has been paid in advance.


 


18.          Tenant’s
Default


 


The
occurrence of any one or more of the
following events shall, at Landlord’s option, constitute a “Default” by Tenant
of the provisions of this Lease:


 


18.1        The abandonment of the Premises by Tenant, as
abandonment is statutorily defined in California Civil Code Section 1951.3 or
all similar or successor laws;


 


18.2        The failure
by Tenant to make any payment of Rent, Additional Rent or any other payment or
charge required hereunder within three (3) business days following
Landlord’s delivery of written notice that said payment is due; provided, any
such written notice shall be in lieu of, and not in addition to, any notice
required under California Code of Civil Procedure Sections 1161 et seq. and all
similar or successor laws;


 


18.3        Except as otherwise provided in Section 19.4
hereof, the failure by Tenant to observe, perform or comply with any of the conditions, covenants or
provisions of this Lease (except failure to make any payment of Rent and/or
Additional Rent and any other payment or charge required hereunder) and such failure
is not cured within (i) thirty (30) days of the date on which Landlord
delivers written notice of such failure to Tenant for all failures other than
with respect to (a) Hazardous Materials (defined in Section 27
hereof), (b) Tenant making the repairs, maintenance and replacements
required under the provisions of Section 11.1 hereof, or (c) Tenant’s  failure
to timely deliver a subordination agreement as set forth in Section 15
above, a counterpart of a fully executed Transfer document and a consent thereto
(collectively, the “Transfer Documents”), an estoppel certificate and insurance
certificates (except as set forth in (ii) hereof), (ii) ten (10) days
of the date on which Landlord delivers written notice of such failure to Tenant
for all failures in any way related to Hazardous Materials, Tenant failing to
timely make the repairs, maintenance or replacements required by section 11.1, or
any default with respect to any provision of this Lease relating to
subordination agreement, Transfer Documents, assignment and sublease, estoppel
certificates and insurance (except as set forth in (ii) hereof). However, provided
a Chronic Default has not occurred, Tenant shall not be in default of its
obligations hereunder if such failure (other than any failure of Tenant to
timely and properly make the repairs, maintenance, or replacements required by Section 11.1,
or timely deliver a subordination agreement, the Transfer Documents, an
estoppel certificate or insurance certificates) cannot reasonably be cured
within such thirty (30) or ten (10) day period, as applicable, and Tenant
promptly commences, and thereafter diligently proceeds with same to completion,
all actions necessary to cure such failure as soon as is reasonably possible, but
in no event shall the completion of such cure be later than sixty (60) days
after the date on which Landlord delivers to Tenant written notice of such
failure, unless Landlord, acting reasonably and in good faith, otherwise
expressly agrees in writing to a longer period of time based upon the
circumstances relating to such failure as well as the nature of the failure and
the nature of the actions necessary to cure such failure. Any such written
notice provided hereunder shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Sections 1161, et seq.
and all similar or successor laws; or


 


18.4        The  making of a general
assignment by Tenant for the benefit of creditors, the filing of a voluntary
petition by Tenant or the filing of an involuntary petition by any of Tenant’s
creditors seeking the rehabilitation, liquidation, or reorganization of Tenant
under any law relating to bankruptcy, insolvency or other relief of debtors and,
in the case of an involuntary action, the failure to remove or discharge the same within sixty (60)
days of such filing, the appointment of a receiver or other custodian to take
possession of substantially all of Tenant’s assets or this leasehold, Tenant’s
insolvency or inability to pay Tenant’s debts or failure generally to pay
Tenant’s debts when due, any court entering a decree or order directing the
winding up or liquidation of Tenant or of substantially all of Tenant’s assets,  Tenant taking any action toward the
dissolution or winding up of Tenant’s affairs, the cessation or suspension of
Tenant’s use of the Premises, or the attachment, execution or other judicial
seizure of substantially all of Tenant’s assets or  this leasehold.


 


19.          Remedies
for Tenant’s Default


 


                19.1        Landlord’s Rights: In the event of Tenant’s Default under this
Lease, Landlord may terminate Tenant’s right to possess the Premises by any
lawful means. Following delivery of written notice by Landlord, this Lease
shall terminate on the date specified in such notice and Tenant shall
immediately surrender possession of the Premises to Landlord. In addition, whether
or not this Lease is terminated, Landlord shall have the right to immediately
re-enter the Premises, and if Landlord’s right of re-entry is exercised
following Tenant’s abandonment of the Premises, all of Tenant’s Property left
on the Premises or in the Project shall be deemed abandoned. If Landlord relets
the Premises or any portion thereof, Tenant shall immediately be liable to
Landlord for all costs Landlord incurs in reletting the Premises or any part
thereof, including, without limitation, broker’s commissions, expenses of
cleaning, redecorating, and further improving the Premises and other similar
costs (collectively, the “Reletting Costs”). All Reletting Costs shall be fully
chargeable to Tenant and shall not be prorated or otherwise amortized in relation to any new lease for the
Premises or any portion thereof. Reletting may be for a period shorter or
longer than the remaining term of this Lease. In no event shall Tenant be
entitled to any excess rent received by Landlord. No act by Landlord other than
giving written notice to Tenant shall terminate this Lease or Tenant’s right to
possess the Premises, including without limitation, acts of maintenance, efforts
to relet the Premises or the appointment of a receiver on Landlord’s initiative
to protect Landlord’s interest under this Lease. At all times Landlord shall
have the right to remedy any Default of Tenant, to maintain or improve the Premises, to cause a
receiver to be appointed to administer the


 


9

















 


Premises
and any new or existing subleases and to add to the Rent payable hereunder all
of Landlord’s reasonable costs in so doing, with interest at the maximum rate
permitted by law from the date of such expenditure.


 


19.2        Damages
Recoverable: If Tenant
breaches this Lease and abandons the Premises before the end of the Term, or if
Landlord terminates Tenant’s right to possession following Tenant’s Default
under this Lease, then in either such case, Landlord may recover from Tenant
all damages suffered by Landlord as a result of Tenant’s failure to perform its
obligations hereunder, including without limitation, the unamortized cost of
any Tenant Improvements constructed by or on behalf of Tenant pursuant to Exhibit B
hereto to the extent Landlord has paid for such improvements, the
unamortized portion of any broker’s or leasing agent’s commission incurred with
respect to the leasing of the Premises to Tenant for the balance of the Term
remaining after the date on which Tenant is in Default of its obligations
hereunder (to the extent the foregoing is not covered by the unpaid Rent
collected for the balance of the Term), and all Reletting Costs, and the worth
at the time of the award (computed in accordance with paragraph (3) of
Subdivision (a) of Section 1951.2 of the California Civil Code) of
the amount by which the Rent then unpaid hereunder for the balance of the Lease
Term exceeds the amount of such loss of Rent for the same period which Tenant
proves could be reasonably avoided by Landlord and in such case, Landlord prior
to the award, may relet the Premises for the purpose of mitigating damages
suffered by Landlord because of Tenant’s failure to perform its obligations
hereunder; provided, however, that even if Tenant abandons
the Premises following such breach, this Lease shall nevertheless continue in
full force and effect for as long as Landlord does not terminate Tenant’s right
of possession, and until such termination, Landlord shall have the remedy
described in Section 1951.4 of the California Civil Code (Landlord may
continue this Lease in effect after Tenant’s breach and abandonment and recover
Rent as it becomes due, if Tenant
has the right to sublet or assign, subject only to reasonable limitations) and
may enforce all its rights and remedies under this Lease, including the right
to recover the Rent from Tenant as it becomes due hereunder. The “worth at the
time of the award” within the meaning of Subparagraphs (a)(1) and (a)(2) of
Section 1951.2 of the California Civil Code shall be computed by allowing
interest at the rate of ten percent (10%) per annum. Tenant hereby waives for itself
and for all those claiming under Tenant its right to obtain redemption or
relief from forfeiture under California Code of Civil Procedure Sections 1174
and 1179 (or any successor or substitute statute), or under any other present
or future law, in the event judgment for possession enters against Tenant or
Landlord takes possession of the Premises following any Default of Tenant
hereunder.


 


19.3        Audit Rights:
In the event of Tenant’s
Default of this Lease, Landlord or its designated agent shall have the right to
audit and/or inspect Tenant’s records, books, accounts and other data relating
to the Premises and this Lease. Landlord shall give Tenant not less than five (5) days’
written notice of its intention to conduct any such audit. Furthermore, in such
event, Tenant, within five (5) days after Landlord’s request therefor, shall
deliver to Landlord the then current audited financial statements of Tenant (including
interim periods following the end of the last fiscal year for which annual
statements are available). If audited financial statements have not been
prepared, Tenant shall provide Landlord with unaudited financial statements (certified
by an authorized representative or officer of Tenant) and such other
information, the type and form of which are reasonably acceptable to Landlord, which
reflect the financial condition of Tenant.


 


19.4        Chronic Default:
The term “Chronic
Default” as used in this Lease shall mean that Tenant has Defaulted in the performance
of any of its obligations under this Lease more than three (3) times
during any  calendar year, regardless of whether or not Tenant
cures any such Default, A Chronic
Default is not curable by Tenant. Upon the occurrence of a Chronic Default and
at all times thereafter during the balance of the Term of this Lease, Landlord
shall no longer be obligated to provide Tenant written notice of default as set
forth in Section 18.3 hereof and Tenant shall no longer be  entitled
to any cure period set forth in this Lease, including without limitation, those
cure periods set forth in Section 18.3. Following a Chronic Default, Landlord,
in its sole discretion, may elect to provide written notice of default to
Tenant or grant Tenant a period during which it may cure any such default, however,
no Such delivery of written notice or grant of a cure period by Landlord shall
in any way obligate Landlord to provide Tenant any subsequent written notices
of default or cure periods.


 


19.5        Rights and
Remedies Cumulative: The
foregoing rights and remedies of Landlord are not exclusive; they are cumulative
in addition to any rights and remedies now or hereafter existing at law, in
equity, by statute or otherwise, and to any remedies Landlord may have under
bankruptcy laws or laws affecting creditors’ rights generally. In addition to all
of the remedies set forth above, if Tenant Defaults under this Lease, all
options granted to Tenant hereunder shall automatically terminate, unless
otherwise expressly agreed to in writing by Landlord.


 


20.          Holding
Over


 


If  Tenant holds over after the expiration of the
Term, with or without the express or implied consent of Landlord, such tenancy
shall be from month-to-month only, and shall not constitute a renewal hereof or
an extension for any further term, and in such case Base Rent shall be payable
at a monthly rate equal to one hundred fifty percent (150%) of the Base Rent
applicable during the last rental period of the Term under this Lease. Such
month-to-month tenancy shall be subject to every other term and provision
contained herein. Landlord hereby expressly reserves the right to require
Tenant to surrender possession of the Premises to Landlord in  the
condition required herein upon the expiration or earlier termination of this
Lease. The provisions of this Section 20 shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided herein
or at law. If Tenant fails to surrender the Premises upon the expiration or
earlier termination of this Lease, in addition to any other liabilities to
Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold
Landlord harmless from all Claims resulting from such failure, including but  not
limited to, any Claims made by any succeeding tenant founded upon such failure
to surrender, and any lost profits to Landlord resulting therefrom.


 


21.          Landlord’s
Default


 


Landlord
shall not be considered in default of this Lease unless Landlord fails within a
reasonable time to perform an obligation required to be  performed by Landlord hereunder. For purposes hereof, a reasonable time
shall in no event be less than thirty (30) days after receipt by Landlord of
written notice specifying the nature of the obligation Landlord has not
performed; provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days, after receipt of written
notice, is reasonably necessary for its performance, then Landlord shall not be
in  default
of this Lease if performance of such obligation is commenced within such thirty
(30) day period and thereafter diligently pursued to completion.


 


22.          Parking


 


Tenant
may use the number of non-designated and non-exclusive parking spaces specified
in the Basic Lease Information, Landlord shall exercise reasonable efforts to
ensure that such spaces are available to Tenant for its use, but  Landlord shall not be required to enforce Tenant’s right to use the same.
Tenant and Tenant’s Representatives shall not park or permit any parking of
vehicles overnight.


 


23.          Transfer of
Landlord’s Interest


 


Tenant
acknowledges that Landlord has the right to transfer all or any portion of its
interest in the Premises, Building, Project and this Lease. Tenant expressly
agrees that in the event of any such transfer, Landlord shall automatically be
entirely released from all liability under this Lease and Tenant agrees to look
solely to such transferee for the performance of Landlord’s obligations
hereunder after the date of such transfer. Landlord shall use commercially
reasonable efforts to cause each such transferee to agree to perform Landlord’s
obligations hereunder arising or accruing after the date of such transfer. A
ground lease or similar long term lease by Landlord of the entire Building or
Lot, of which the Premises are a part, shall be deemed a sale within the
meaning of this Section 23. Tenant agrees to


 


10

















 


attorn
to such new owner provided such new owner does not disturb Tenant’s use, occupancy
or quiet enjoyment of the Premises so long as Tenant is not in Default of this
Lease.


 


24.          Waiver


 


No
delay or omission in the exercise of any right or remedy of either party on any
default by the other party shall impair such a right or remedy or be construed
as a waiver. The subsequent acceptance of Rent by Landlord after Default by
Tenant of this Lease shall not be deemed a waiver of such Default, other than a
waiver of timely payment for the particular Rent payment involved, and shall
not prevent Landlord from maintaining an unlawful detainer or other action
based on such Default. No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly Rent and other sums due hereunder shall be deemed to be
other than on account of the earliest Rent or other sums due, nor shall any
endorsement or statement on any check or accompanying any check or payment be
deemed an accord and satisfaction; and Landlord may accept such payment without
prejudice to Landlord’s right to recover the balance of such Rent or other sum
or pursue any other remedy provided in this Lease. No failure, partial exercise
or delay on the part of the Landlord in exercising any right, power or
privilege hereunder shall operate as a waiver thereof.


 


25.          Casualty
Damage


 


25.1        Casualty:
If  the Premises or any part [excluding any of
Tenant’s Property, any Wi-Fi Network, any Tenant Improvements and any
Alterations installed by or for the benefit of Tenant (collectively, “Tenant’s
FF&E”) shall be damaged or destroyed by fire or other casualty, then within
sixty (60) days after such casualty, Landlord shall notify Tenant, in writing, of
the following time period within which the necessary repairs can reasonably be
made, as estimated by Landlord: (a) within one hundred eighty (180) days, or
(b) in more than one hundred eighty (180) days, from the date of such
casualty. Provided such insurance is available at commercially reasonable rates,
Landlord agrees to maintain rental loss insurance during the Term hereof. All
costs of such insurance maintained by Landlord hereunder shall be included in
Operating Expenses.


 


25.1.1     Minor
Insured Damage: If the
Premises (other than Tenant’s FF&E) are damaged only to such extent that
repairs, rebuilding and/or restoration can be reasonably completed within one
hundred eighty (180) days from the date of such casualty, this Lease shall not
terminate and, provided that insurance proceeds are available and paid to
Landlord to fully repair the damage and/or Tenant otherwise voluntarily
contributes any shortfall thereof, Landlord shall repair the Premises to
substantially the same condition that existed prior to the occurrence of such
casualty, except Landlord shall not be required to rebuild, repair, or replace
any of Tenant’s FF&E. The Rent payable hereunder shall be abated
proportionately from the date and to the extent Tenant vacates the affected  portions of the Premises until any and all repairs required herein to be
made by Landlord are substantially completed, but such abatement shall (i) only
be to the extent of the portion of the Premises which is actually rendered
unusable and unfit for occupancy or inaccessible, (ii) only be during the
time Tenant is not actually using same, and (iii) only apply to the extent
Landlord receives rental loss insurance proceeds therefor.


 


25.1.2     Major
Insured Damage: If the
Premises (other than Tenant’s FF&E) are damaged to such extent that repairs, rebuilding and/or restoration
cannot be reasonably completed, as reasonably determined by Landlord, within
one hundred eighty (180) days from the date of such casualty, then either
Landlord or Tenant may terminate this Lease by giving written notice within
twenty (20) days after notice from Landlord regarding the time period of repair.
If either party notifies the other of its intention to so terminate this Lease,
then this Lease shall terminate and the Rent shall be abated from the date of
the occurrence of such damage, provided Tenant diligently proceeds to and expeditiously
vacates the Premises (but, in all events Tenant must vacate and surrender the
Premises to Landlord by no later than ten (10) business days thereafter or
there shall not be any abatement of Rent until Tenant so vacates the Premises).
If neither party elects to terminate this Lease, Landlord shall promptly
commence and diligently prosecute to completion the repairs to the Premises, provided
insurance proceeds are available and paid to Landlord to fully repair the
damage or Tenant voluntarily contributes any shortfall thereof (except that
Landlord shall not be required to rebuild, repair, or replace any of Tenant’s
FF&E). During the time when Landlord is prosecuting such repairs to
substantial completion, the Rent payable hereunder shall be abated proportionately
from the date and to the extent Tenant actually vacates the affected portions
of the Premises until any and all repairs required herein to be  made by Landlord are  substantially completed, but such abatement
shall (i) only be to the extent of the portion of the  Premises which is actually rendered unusable and unfit for occupancy or
inaccessible, (ii) only be during the time Tenant is not actually using
same, and (iii) apply only to the extent Landlord receives rental loss
insurance proceeds therefor.


 


25.1.3     Damage
Near End of Term: Notwithstanding
anything to the contrary contained in this Lease except for the provisions of Section 25.3
below, if the Premises are substantially damaged during the last year of then
applicable term of this Lease, either Landlord or Tenant may, at their option, cancel
and terminate this Lease by giving written notice to the other party of its
election to do so within forty-five (45) days after receipt by Landlord or
notice from Tenant of the occurrence of such casualty. If either party so
elects to terminate this Lease, all rights of Tenant hereunder shall cease and
terminate ten (10) days after Tenant’s receipt or delivery of such notice,
as applicable, and Tenant shall immediately vacate the Premises and surrender
possession thereof to Landlord.


 


25.2        Intentionally
omitted.


 


25.3        Tenant’s
Fault and Lender’s Rights: Notwithstanding anything to the contrary contained herein, if the
Premises (other than Tenant’s FF&E) or any other portion of the Building is
damaged by fire or other casualty due to the acts or omissions of Tenant or any
of Tenant’s Representatives, (i) the Rent shall only be abated during the
repair of such damage to the extent Landlord receives rental loss insurance
proceeds therefor, (ii) Tenant will not have any right to terminate this
Lease due to the occurrence of such casualty, and (iii) Tenant will be
responsible for the excess cost and expense of the repair and restoration of
the Building (including any deductible) to the extent not covered by insurance
proceeds. Notwithstanding anything to the contrary contained herein, if the
holder of any indebtedness secured by the Premises or any other portion of the
Project requires that the insurance proceeds be applied to  such indebtedness,
then Landlord shall have the right to terminate this Lease by delivering
written notice of termination to Tenant within thirty (30) days after the date
of notice to Tenant of such event, whereupon all rights of Tenant shall cease
and terminate ten (10) days after Tenant’s receipt of such notice, and
Tenant shall immediately vacate the Premises and surrender possession thereof
to Landlord.


 


25.4        Tenant’s
Waiver: Landlord shall
not be liable for any inconvenience or annoyance to Tenant, injury to the business
of Tenant, loss of use of any part of the Premises by Tenant or loss of Tenant’s
Property, resulting in any way from such damage or the repair thereof. With
respect to any damage which Landlord is obligated to repair or may elect to
repair, Tenant waives all rights to terminate this Lease or offset any amounts
against Rent pursuant to rights accorded Tenant by any law currently existing
or hereafter enacted, including without limitation, all rights pursuant to
California Civil Code Sections 1932 (2.), 1933 (4.), 1941 and 1942 and any
similar or successor laws.


 


26.          Condemnation


 


If
twenty-five percent (25%) or more of the Premises is condemned by eminent
domain, inversely condemned or sold in lieu of condemnation for any public or
quasi-public use or purpose (“Condemned”), then Tenant or Landlord may
terminate this Lease as of the date when physical possession of the Premises is
taken and title vests in such condemning authority, and Rent shall be adjusted
to the date of termination. Tenant shall not because of such condemnation
assert any claim against Landlord or the condemning authority for any
compensation because of such condemnation, and Landlord shall be entitled to
receive the entire amount of any


 


11

















 


award
without deduction for any estate of interest or other interest of Tenant; provided, however,
the foregoing shall not preclude Tenant, at Tenant’s sole cost and expense, from
obtaining any separate award to Tenant for loss of, or damage to, Tenant’s
Property or for damages for cessation or interruption of Tenant’s business
provided such award is separate from Landlord’s award and does not diminish nor
otherwise impair the award otherwise payable to Landlord. In addition to the
foregoing, Tenant shall be  entitled to seek compensation for
the relocation costs recoverable by Tenant pursuant to the provisions of
California Government Code Section 7262. If neither party elects to
terminate this Lease, Landlord shall, if necessary, promptly proceed to restore
the Premises or the Building, as applicable, to substantially the same
condition prior to such partial condemnation, allowing for the reasonable
effects of such partial condemnation, and a proportionate allowance shall be
made to Tenant, as determined by Landlord, for the Rent corresponding to the
time during which, and to the part of the Premises of which, Tenant is deprived
on account of such partial condemnation and restoration. Landlord shall not be
required to spend funds for restoration  in excess of the condemnation proceeds
received by Landlord.


 


27.          Environmental
Matters/Hazardous Materials


 


27.1        Hazardous
Materials Disclosure Certificate: Simultaneously herewith, Tenant has delivered to Landlord Tenant’s
executed initial Hazardous Materials Disclosure Certificate (the “Initial
HazMat Certificate”), a copy of which is attached hereto as Exhibit D.
Tenant covenants, represents and warrants to Landlord that the information in
the Initial HazMat Certificate is true and correct and accurately describes the
use(s) of
Hazardous Materials which will be made and/or used on the Premises by Tenant. Tenant,
upon Landlord’s written request and/or if any of the information in the Initial
Hazardous Materials Certificate or the Hazardous Materials Certificate (as
defined below), most recently provided to Landlord has changed, shall deliver
to Landlord, an executed Hazardous Materials Disclosure Certificate (“the “HazMat
Certificate”), in substantially the form attached hereto as Exhibit D,
describing Tenant’s then present use  of Hazardous Materials on the
Premises, and any other reasonably necessary documents as requested by
Landlord.


 


27.2        Definition
of Hazardous Materials: “Hazardous
Materials” means (a) any hazardous or toxic wastes, materials or
substances, and other pollutants or contaminants, which are or become regulated
by any Environmental Laws; (b) petroleum, petroleum by products, gasoline,
diesel fuel, crude oil or any fraction thereof; (c) asbestos and asbestos
containing material, in any form, whether friable or nonfriable; (d) polychlorinated
biphenyls; (e) radioactive materials; (f) lead and lead-containing
materials; (g) any other material, waste or substance displaying toxic, reactive,
ignitable or corrosive characteristics, as all such terms are used in their
broadest sense, and are defined or become defined by any Environmental Law (defined
below); (h) any materials which cause or threatens to cause a nuisance
upon or waste to any portion of the Project or any surrounding property; or (i) any
materials which pose or threaten to pose a hazard to the  health and safety of persons on the Premises, any other portion of the
Project or any surrounding property. For purposes of this Lease,  “Hazardous Materials” shall not include nominal amounts of ordinary
household cleaners, office supplies and janitorial supplies which are not
actionable under any Environmental Laws.


 


27.3        Prohibition;
Environmental
Laws: Tenant shall not be entitled to use or store
any Hazardous Materials on, in, or about any portion of the Premises or Project
not disclosed in the Initial HazMat Certificate, or subsequent HazMat
Certificate approved by Landlord, without, in each instance, obtaining Landlord’s
prior written consent thereto. If Landlord, in its sole discretion, consents to
any such usage or storage, then Tenant shall be permitted to use and/or store
only those Hazardous Materials and in such quantities (A) that are necessary for Tenant’s business, (B) to the extent disclosed in
the most recent HazMat Certificate, and (C) expressly approved by Landlord
in writing. In all events such usage and storage must at all times be in  full
compliance with any and all applicable  local, state and federal environmental, health
and/or safety-related laws, statutes, orders, standards, courts’ decisions, ordinances,
rules and regulations (as interpreted by judicial and administrative
decisions), decrees, directives, guidelines, permits or permit conditions, currently
existing and as amended, enacted, issued or adopted in the future (collectively,
the “Environmental Laws”). Tenant agrees that any changes to the type and/or
quantities of Hazardous Materials specified in the most recent HazMat
Certificate may be implemented only with the prior written consent of Landlord,
which consent may be  given or withheld in Landlord’s sole discretion, however, any changes that are not material in the types
and quantities of Hazardous Materials specified in the most recent HazMat
Certificate, then Landlord’s consent shall not be unreasonably withheld. Tenant
shall not be entitled nor permitted to install any tanks under, on or about the
Premises for the storage of Hazardous Materials without the express written
consent of Landlord, which may be  given or withheld in
Landlord’s sole discretion. Landlord shall have the right at all times during
the Term to (i) inspect the Premises, (ii) conduct tests and
investigations to determine whether Tenant is in compliance with this Section 27 or to determine if Hazardous Materials are present in, on or about the
Project, and (iii) request lists of all Hazardous Materials used, stored
or otherwise located on, under or about any portion of the Premises and/or the
Common Areas. The cost of all such inspections, tests and investigations (collectively,
“Inspections”) shall be borne by Tenant, if Tenant or any of Tenant’s
Representatives are directly or indirectly responsible for any contamination
revealed by such Inspections. The aforementioned rights granted herein to
Landlord and its representatives shall not create (a) a duty on Landlord’s
part to perform Inspections, monitor or otherwise observe the Premises or
Tenant’s and Tenant’s Representatives’ activities with respect to Hazardous
Materials, including without limitation, Tenant’s operation, use and any
remediation related thereto, or (b) liability on the part of Landlord and
its representatives for Tenant’s use, storage, disposal or remediation of
Hazardous Materials, it being understood that Tenant shall be solely
responsible for all liability in connection therewith. Landlord has not, to its
actual knowledge, without inquiry or investigation, as of the date of execution
of this Lease, received written notice of any  existing
violations of Environmental Laws within the Premises from  any governmental agency having jurisdiction over the Project.


 


                27.4        Tenant’s Environmental Obligations: Tenant shall give to Landlord immediate
verbal and follow-up written notice of any spills, releases, discharges, disposals,
emissions, migrations, removals or transportation of Hazardous Materials on, under
or about any portion of the Premises or in any Common Areas (collectively, a “Release”);
provided that Tenant has knowledge of such event(s). Tenant, at its sole cost and expense, covenants and
warrants to promptly investigate, clean up, remove, restore and otherwise
remediate (including, without limitation, preparation of any feasibility
studies or reports and the performance of any and all closures) any Release of
Hazardous Materials arising from or related to the acts or omissions of Tenant
or Tenant’s Representatives such that the
affected  portions of the Project and any adjacent property are returned to the condition existing prior
to the appearance of such Hazardous Materials. Any such investigation, clean up,
removal, restoration and other remediation shall only be performed after Tenant has obtained Landlord’s prior written consent, which
consent shall not be unreasonably withheld so long as such actions would not
potentially have a material adverse long-term or short-term effect on any
portion of the Project. Notwithstanding the foregoing, Tenant shall be entitled
to respond immediately to an emergency without first obtaining Landlord’s prior
written consent. Tenant, at its sole cost and expense, shall conduct and
perform, or cause to be conducted and performed, all closures as required by
any Environmental Laws or any agencies or other governmental authorities having
jurisdiction thereof. If Tenant fails to so promptly investigate, clean up, remove,
restore, provide closure or otherwise so remediate, Landlord may, but without
obligation to do so, take any and all steps necessary to rectify the
same and Tenant shall promptly
reimburse Landlord, upon written demand, for all costs and expenses to Landlord
of performing investigation, clean up, removal, restoration, closure and
remediation work. All such work undertaken by Tenant, as required herein, shall
be performed in such a manner so as to enable Landlord to make full economic
use of the Premises and the other portions of the Project after the
satisfactory completion of such work. Tenant shall neither be liable for nor
otherwise obligated to Landlord under any provision of this Lease with respect
to any claim, liability, cause of action, attorneys’ fees, consultants’ cost, expense
or damage (collectively, “Hazardous Materials Claims”) resulting from any
Hazardous Material present in, on or about the Premises or the Project to the
extent neither caused nor otherwise permitted, directly or indirectly, by
Tenant (and for the purposes of this Section 27.4, the term “Tenant”
includes Tenant’s agents, invitees, employees and contractors); provided, however,
Tenant shall be fully liable for
and otherwise obligated to Landlord for all Hazardous Materials Claims, to the
extent (a) Tenant contributes to the presence of, or Tenant exacerbates
the conditions caused by, such Hazardous Materials, or (b) Tenant does not
take all reasonably appropriate actions to prevent Tenant’s agents, employees, invitees
and/or contractors from causing the presence of


 


12

















 


Hazardous
Materials in, on, under, through or about any portion of the Premises or the
Project.


 


27.5        Environmental
Indemnity: Tenant
shall, protect, indemnify, defend (with counsel acceptable to Landlord) and hold
Landlord and the other Indemnitees harmless from and against any and all Claims
(including, without limitation, diminution in value of any portion of the
Premises or the Project, damages for the loss of or restriction on the use of rentable
or usable space, and from any adverse impact of Landlord’s marketing of any
space within the Project) arising at any time during or after the Term in
connection with or related to, directly or indirectly, the use, presence or
Release of Hazardous Materials on, in or about any portion of the Project as a
result (directly or indirectly) of the acts or omissions of Tenant or any of
Tenant’s Representatives. Neither the written consent of Landlord to the
presence, use or storage of Hazardous Materials in, on, under or about any
portion of the Project nor the strict compliance by Tenant with all
Environmental Laws shall excuse Tenant from its obligations of indemnification
pursuant hereto. Tenant shall not be relieved of its indemnification
obligations under the provisions of this Section 27.5 due to Landlord’s
status as either an “owner” or “operator” under any Environmental Laws.


 


27.6        Mold: If Tenant discovers the existence of any mold
or any conditions that reasonably can be expected to give rise to mold, Tenant
will notify Landlord and, if requested by Landlord, retain an industrial
hygienist or other professional mold consultant to conduct an inspection and
prepare a report for Tenant and Landlord. If the inspection report concludes
that mold is present in the Premises, Tenant, at its sole cost and expense, will
hire a contractor that satisfies the requirements of Section 10 that
specializes in mold remediation to prepare a remediation plan for the Premises. If the inspection report concludes that mold is present in the
Premises due substantially to actions, omissions or negligence of Tenant, Tenant
will be responsible for the cost of such inspection and the cost of remediation
to the extent of Tenant’s responsibility for the presence of mold at or within
the Premises; however, if the inspection report concludes that mold is present in
the Premises and is not substantially due to actions, omissions or negligence
of Tenant, Landlord will be responsible for the cost of such inspection and the
cost of remediation to the extent of Landlord’s responsibility for the presence
of mold at or within the Premises. Any remediation plan will be subject to the
approval of Landlord, which approval will not be unreasonably withheld or
delayed. Upon Landlord’s approval of the plan, the contractor will promptly
carry out the work contemplated in the plan in accordance with Laws. To the
extent required by applicable state or local health or safety requirements, occupants
and visitors to the Premises will be notified of the conditions and the
schedule for the remediation. Landlord will have a reasonable opportunity to inspect
the remediated portion of the Premises after completion of the remediation. The
contractor performing the remediation will provide a written certification to
Landlord and Tenant that the remediation has been completed in accordance with Laws. Tenant
covenants and agrees to indemnify, protect, defend (by counsel reasonably
acceptable to Landlord) and save Landlord and any Indemnitee harmless against
and from any and all Claims, known or unknown, foreseen or unforeseen, contingent
or otherwise, which may at any time be imposed upon, incurred by or asserted or
awarded against Landlord, any Indemnitee or the Premises (which for purposes of
this Section shall be deemed to include any parking and/or storage space) or
any portion thereof and arising from or out of any mold on, in, under or
affecting all or any portion of the Premises, introduced by Tenant or any
Tenant Representative including, without limitation, (i) the costs of
removal of any and all mold from all or any portion of the Premises, (ii) additional
costs required to take necessary precautions to protect against the release of
mold on, in, under or affecting the Premises, into the air, any body of water, any
other public domain or any surrounding areas, and (iii) any costs incurred
to comply with all Environmental Laws. The foregoing indemnity shall not apply
to mold which (i) was not introduced by Tenant or any Tenant
Representative and/or (ii) may be located in the Premises at or prior to
the occupancy of the Premises or any other part of the Building by Tenant or any Tenant Representative or, if
sooner, the initial commencement (heretofore or hereafter) of any work, construction,
repairs or alterations therein by Tenant or any Tenant Representative.


 


27.7        Survival:
Tenant’s obligations
and liabilities under this Section 27 shall survive the expiration or
earlier termination of this Lease, If Landlord determines that the condition of
any portion of the Project violates the provisions of this Lease with respect
to Hazardous Materials, and such violation prevents, inhibits or delays
Landlord from leasing the Premises or any portion thereof to another tenant, or
from selling or refinancing the Building, then Landlord may require Tenant to
hold over possession of the Premises until Tenant can surrender the Premises to
Landlord in the condition in  which the Premises existed prior to
the appearance of such Hazardous Materials (except for reasonable wear and
tear), including without limitation, performing closures as required by any
Environmental Laws. For purposes hereof, the term “reasonable wear and tear”
shall not include any deterioration in the condition or diminution of the value
of any portion of the Project in any manner whatsoever related to directly, or
indirectly, Hazardous Materials. Any such holdover by Tenant will be with
Landlord’s consent and will not be terminable by Tenant in any event or
circumstance.


 


28.         Financial
Statements


 


Tenant represents and warrants
that any financial statements provided by it to Landlord were true, correct and
complete when provided, and that no material adverse change has occurred since
that date that would render them inaccurate or misleading. Subject to
restrictions on disclosure under applicable Law, Tenant, within fifteen (15) days
after request, shall provide Landlord with most current audited or certified
financial statements and such other information with respect to Tenant and any
guarantor hereunder as Landlord may reasonably request in order to create a “business
profile” of Tenant and determine Tenant’s ability to fulfill its obligations
under this Lease. In addition, Tenant agrees upon prior written request to meet
with Landlord, any lender or prospective purchaser during normal business hours
at mutually convenient times, from time to time, to discuss such information
about Tenant’s business and financial condition requested by Landlord.


 


29.         General
Provisions


 


29.1        Time: Time is of the essence in this Lease and with
respect to each and all of its provisions in which performance is a factor.


 


29.2        Successors
and Assigns: The
covenants and conditions herein contained, subject to the provisions as to assignment,
apply to and bind the heirs, successors, executors, administrators and assigns
of the parties hereto.


 


29.3        Recordation:
Tenant shall not
record this Lease or a short form memorandum hereof.


 


29.4        Landlord
Exculpation: The
liability of Landlord to Tenant for any default by Landlord under the terms of
this Lease shall be limited to the actual interest of Landlord and its present
or future partners or members in the Building, and Tenant agrees to look solely
to Landlord’s interest in the Building for satisfaction of any liability and
shall not look to other assets of Landlord nor seek any recourse against the
assets of the individual partners, members, directors, officers, shareholders, agents
or employees of Landlord, including without limitation, any property management
company of Landlord (collectively, the “Landlord Parties”). It is the parties’ intention
that Landlord and the Landlord Parties shall not in any event or circumstance
be personally liable, in any manner whatsoever, for any judgment or deficiency
hereunder or with respect to this Lease. The liability of Landlord under this
Lease is limited to its actual period of ownership of title to the Building.


 


29.5        Severability
and Governing Law: Any
provisions of this Lease which shall prove to be invalid, void or illegal shall
in no way affect, impair or invalidate any other provisions hereof and such
other provisions shall remain in full force and effect. This Lease shall be
enforced, governed by and construed in accordance with the laws of the State of
California.


 


29.6        Attorneys’
Fees: Tenant shall pay
to Landlord on demand all reasonable attorney’s fees, costs and expenses incurred
by Landlord in recovery of any Rent or enforcement of Landlord’s rights under
this Lease. Furthermore, if Landlord or Tenant employs an attorney to assert or
defend any action arising out of the breach of any term, covenant or provision
of this Lease, or to


 


13














 


bring
legal action for the unlawful detainer of the Premises, the prevailing party
shall be entitled to recover from the non-prevailing party reasonable attorney’s
fees and costs of suit incurred in connection therewith. For purposes of this Section 29.6 a party shall be considered to be the “prevailing party” to the extent
that (i) such party initiated the litigation and substantially obtained the
relief which it sought (whether by judgment, voluntary agreement or action of the other party, trial, or alternative dispute
resolution process), (ii) such party did not initiate the litigation and either
(1) received a judgment in its favor, or (2) did not receive judgment in its
favor, but the party receiving the judgment did not substantially obtain the
relief which it sought, or (iii) the other party to the litigation withdrew its
claim or action without having substantially received the relief which it was
seeking. With respect to any matter as to which Tenant requests Landlord’s
consent or approval hereunder, or if Tenant requests any waiver, modification, or
amendment of any provisions hereof, Tenant shall, whether or not any such
consent, approval, waiver, modification or amendment, is agreed to, pay to
Landlord as Rent hereunder all of Landlord’s out of pocket  costs (including, without limitation,
attorneys’ fees and engineers’ fees) incurred by Landlord in connection with
the review of such matter and preparation and negotiation of documentation in
connection therewith.


 


29.7        Entire Agreement: It is understood and agreed that there are no
oral agreements between the parties hereto affecting this Lease and this Lease
(including all exhibits and addenda) supersedes and cancels any and all
previous negotiations, arrangements, brochures, agreements and understandings, if
any, between the parties hereto or displayed by Landlord to Tenant with respect
to the subject matter thereof, and none thereof shall be used to interpret or
construe this Lease. This Lease, all exhibits and addenda attached hereto and
any separate agreement executed by Landlord and Tenant in connection with this
Lease and dated of even date herewith (a) contain all of the terms, covenants, conditions,
warranties and agreements of the parties relating in any manner to the rental, use
and occupancy of the Premises, and (b) shall be considered to be the only
agreement between the parties hereto and their representatives and agents. This
Lease may not be modified, deleted or added to except by a writing signed by
the parties hereto. All negotiations and oral agreements have been merged into
and are included herein. There are no other representations or warranties
between the parties, and all reliance with respect to representations is based
totally upon the representations and agreements contained in this Lease. The
parties acknowledge that (i) each party and/or its counsel have reviewed and
revised this Lease, and (ii) no rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall be employed in
the interpretation or enforcement
of this Lease or any amendments or exhibits to this Lease or any document
executed and delivered by either party in connection with this Lease.


 


29.8        Warranty of Authority: On  the date that Tenant executes this Lease, Tenant shall deliver to
Landlord an original certificate of status for Tenant issued by the California
Secretary of State or a duly recorded statement of partnership for Tenant, as
applicable, and such other documents as Landlord may reasonably request with
regard to the lawful existence of Tenant. Each person executing this Lease on
behalf of a party represents and warrants that (i) such person is duly and
validly authorized to do so on behalf of the entity it purports to so bind, and
(ii) if such party is a limited liability company, partnership, corporation or
trustee, that such limited liability company, partnership, corporation or
trustee has full right and authority to enter into this Lease and perform all
of its obligations hereunder. Tenant hereby warrants that this Lease is legal, valid
and binding upon Tenant and enforceable against Tenant in accordance with
its terms.


 


29.9        Notices: All notices, demands, statements or
communications (collectively, “Notices”) given or required to be given by either party to the other hereunder shall be in writing, shall be sent by United States certified or registered mail, postage
prepaid, return receipt requested, delivered by a nationally recognized
same-day or overnight courier (e.g. FedEx or UPS) or delivered personally (i) to
Tenant at the Tenant’s Address
set forth in the Basic Lease Information,
or to such other place as Tenant may from time to
time designate in  a Notice to Landlord; or (ii) to
Landlord at Landlord’s Address set forth in the Basic Lease Information, or to
such other firm or to such other place as Landlord may from time to
time designate in a Notice to Tenant. Any Notice will be deemed given on the
date it is mailed as provided in this Section 29.9, upon the first (1st) business day
after delivery to a nationally recognized courier, or upon the date personal
delivery is made.


 


29.10      Joint and Several; Covenants
and Conditions: If Tenant
consists of more than one person or entity, the obligations of all such persons
or entities shall be joint and several. Each provision to be performed by
Tenant hereunder shall be deemed to be both a covenant and a condition.


 


29.11      Confidentiality: Tenant acknowledges that the contents of this
Lease and any related documents are confidential information. Tenant shall keep
and maintain such information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant’s financial,
legal and space planning consultants, prospective assignees or subtenants, and
except as Tenant may be required pursuant to any public filings or other public
disclosures.


 


29.12      Landlord Renovations: Tenant acknowledges that Landlord may from
time to time, at Landlord’s sole option, renovate, improve, develop, alter, or
modify (collectively, “Renovations”) portions of the Building, Premises, Common
Areas and the Project, including without limitation, systems and equipment, roof,
and structural portions of the same; provided Landlord shall utilize
commercially reasonable efforts to minimize the disruption and interference with Tenant’s business and operations at the Premises. In
connection with such Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Project, including portions of the Common Areas, or perform work in the Building, which work
may create noise, dust or leave debris in the Building. Tenant hereby agrees that such Renovations and Landlord’s actions in connection with
such Renovations shall in no way
constitute a constructive eviction of Tenant nor entitle Tenant to any
abatement of Rent. Landlord shall have no responsibility, or for any reason be
liable to Tenant, for any direct or indirect injury to or interference with
Tenant’s business arising from the Renovations, nor shall Tenant be entitled to
any compensation or damages from Landlord for loss of the use of the whole or
any part of the Premises or of
Tenant’s Property, Alterations or improvements resulting from the Renovations
or Landlord’s actions in connection with such Renovations, or for any
inconvenience or annoyance occasioned by such Renovations or Landlord’s actions
in connection with such Renovations; provided Landlord shall utilize
commercially reasonable efforts to minimize the disruption and interference
with Tenant’s business and operations at the Premises.


 


29.13      Waiver of Jury Trial: To the extent permitted by Law, the parties hereto shall and they hereby do waive trial by jury in any action, proceeding or counterclaim brought by
either of the parties hereto against the other on any matters whatsoever
arising out of or in any way related to this Lease, the relationship of Landlord and Tenant, Tenant’s use or occupancy of the Premises, Building, Park
or Project and/or any claim of injury, loss or damage.


 


29.14      Submission of Lease: Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or an option for
lease, and it is not effective as a lease or otherwise until execution and delivery
by both Landlord and Tenant.


 


29.15      Anti-Terrorism Provisions:


 


(i)    Tenant represents and warrants as of the date
of this Lease and throughout the Term of this Lease that: (a) Tenant is and
will continue to be in compliance with the Anti-Terrorism Laws (as defined
below); (b) Tenant is not, and will not be, a Prohibited Person (as defined
below); (c) Tenant does not and will not knowingly: (A) conduct any business or
engage in any transaction or dealing with any Prohibited Person, or (B) deal in,
or otherwise engage in any transaction relating to, any property or interests
in property blocked pursuant to Executive Order 13224 (as defined below); and (d)
Tenant has not entered into this Lease directly or indirectly on behalf of, and
Tenant is not otherwise acting, directly or indirectly, for or on behalf of
any Prohibited Person. Tenant shall promptly notify Landlord if it has reason
to believe that any of the foregoing representations and warranties are no
longer


 


14

















 


correct.


 


(ii)   For the purposes hereof: (a) “Anti-Terrorism
Laws” means any laws related to terrorism or money laundering, including
Executive Order 13224 and the USA Patriot Act (as defined below), and any
regulations promulgated under either of them; (b) “Executive Order 13224” means
Executive Order Number 13224 on Terrorism Financing, effective September 24, 2001;
(c) “Person” means any individual, corporation, partnership, joint venture, limited
liability company, association, bank, joint-stock company, trust, unincorporated
organization or government, or an agency or political subdivision thereof; (d) “Prohibited
Person” means (A) a Person subject to the provisions of Executive Order 13224; (B)
a Person owned or controlled by, or acting for or on behalf of, en entity that is
subject to the provisions of Executive Order 13224; (C) a Person with whom
Tenant is prohibited from dealing by any of the Anti-Terrorism Laws; (D) a
Person that commits, threatens or conspires to commit or supports “terrorism”
as defined In Executive Order 13224; (E) a Person or entity that is named as a “specially
designated national and blocked person” on the most current list published by
the U.S. Treasury Department’s Office of Foreign Assets Control; or (F)  a Person who is affiliated with a Person described In clauses (A) through
(E) above; and (e) “USA Patriot Act” means the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism Act of 2001, H.R. 3162, Public Law 107-56, as may be amended from
time to time.


 


(iii)  Tenant shall defend, indemnify, and hold
harmless Landlord, its members, trustees and agents and its and their
respective employees, officers, directors and members from and against any and
all Claims, arising from or related to any breach of the foregoing
representations and warranties.


 


(iv)  Tenant acknowledges and agrees that, notwithstanding
anything to the contrary in this Lease, Landlord may withhold its consent to
any Transfer if the prospective assignee or subtenant is a Prohibited Person.


 


29.16      Independent Obligations: The obligation of Tenant to pay Rent
hereunder and the obligation of Tenant to perform Tenant’s other covenants and
duties hereunder constitute independent, unconditional obligations to be
performed at all times provided for hereunder and are independent of the
Landlord’s performance of Landlord’s duties and obligations hereunder. Except
as expressly provided in this Lease, Tenant waives and relinquishes all rights
which Tenant might have to claim any nature of lien against or withhold, abate
or deduct from, or offset against Rent.


 


30.          Signs


 


All signs and graphics of every
kind visible in or from public view shall be subject to (i) Landlord’s prior
written approval and (ii), and in compliance with, all applicable Laws, Development
Documents, Recorded Matters, Rules and Regulations, and Landlord’s sign
criteria (“Sign Criteria”) as same may exist from time to time. Notwithstanding
and without limiting the foregoing, subject to Landlord’s
prior review and written approval of specifications relating to such signage, including
without limitation, design, colors and materials relating to such signage, and
the approval of all applicable governmental authorities and agencies, Tenant
shall be permitted, at Tenant’s sole cost and expense, to install its logo or
name on: (i) the tenant monument sign presently situated in the landscape area
in front of the Premises, (ii) the project monument sign presently situated on
the corner of Montague/E. Plumeria and Junction E. Plumeria, and (iii)  the
glass adjacent to the entry to the Premises. Tenant shall remove all such signs
and graphics prior to the expiration or earlier termination of this Lease. Such
installations and removals shall be made in a manner as to avoid damage or
defacement of the Premises and all other affected portions of the Project. Tenant
shall repair any such damage, including without limitation, discoloration
caused by such installation or removal. Tenant shall pay to Landlord, within
thirty (30) days following written demand therefor, such sums as are reasonably
necessary to remove such signs and make any repairs necessitated by such
removal. Notwithstanding the foregoing, in no event shall any: (a) neon, flashing
or moving sign(s) or (b) sign(s) which are likely to interfere with the
visibility of any sign, canopy, advertising matter, or decoration of any kind
of any other business or occupant of the Building or other portions of the
Project be permitted hereunder. Tenant further agrees to maintain each such
sign and graphics, as may be approved, in good condition and repair at all
times.


 


31.          Mortgagee Protection


 


Upon
any default on the part of Landlord, Tenant will give written Notice by
registered or certified mail to any beneficiary of a deed of trust or mortgagee
of a mortgage covering the Premises who has provided Tenant with Notice of
their interest together with an address for receiving Notice, and shall offer
such beneficiary or mortgagee a reasonable opportunity to cure the default, including
time to obtain possession of the Premises by power of sale or a judicial
foreclosure, If such should prove necessary to effect a cure. if such default
cannot be cured within such time period, then such additional time as may be
necessary will be given to such beneficiary or mortgagee to effect such  cure
so long as such beneficiary or mortgagee has commenced the cure within the
original time period and thereafter diligently pursues such cure to completion,
in which event this Lease shall not be terminated while such cure is being
diligently pursued. Tenant agrees that each lender to whom this Lease has been
assigned by Landlord is an express third party beneficiary hereof. Tenant shall
not make any prepayment of Rent more than one (1) month in advance without the
prior written consent of each such lender. Tenant waives the collection of any
deposit from each such lender or purchaser at a foreclosure sale unless said
lender or purchaser shall have actually received and not refunded the deposit. Tenant
agrees to make all payments under this Lease to the lender with the most senior
encumbrance upon receiving a direction, in writing, to pay said amounts to such
lender. Tenant shall comply with such written direction to pay without determining
whether an event of default exists under such lender’s loan to Landlord. If, in
connection with obtaining financing for the Premises or any other portion of
the Project, Landlord’s lender shall request reasonable modification(s) to this
Lease as a condition to such financing, Tenant shall not unreasonably withhold,
delay or defer its consent thereto, provided such modifications do not
materially and adversely affect Tenant’s rights hereunder, including Tenant’s
use, occupancy or quiet enjoyment of the Premises.


 


32.          Warranties of Tenant


 


Tenant
warrants and represents to Landlord, for the express benefit of Landlord, that
Tenant has undertaken a complete and independent evaluation of the risks
inherent in the execution of this Lease and the operation of the Premises for
the use permitted hereby, and that, based upon said independent evaluation, Tenant
has elected to enter into this Lease and hereby assumes all risks with respect
thereto. Tenant further warrants and represents to Landlord, for the express
benefit of Landlord, that in entering into this Lease, Tenant has not relied
upon any statement, fact, promise or representation (whether express or implied,
written or oral) not specifically set forth herein and that any statement, fact,
promise or representation (whether express or implied, written or oral) made at
any time to Tenant, which is not expressly incorporated herein, is hereby
waived by Tenant.


 


33.          Brokerage Commission


 


Landlord
and Tenant each represents and warrants for the benefit of the other that it
has had no dealings with any real estate broker, agent or finder in connection
with the Premises and/or the negotiation of this Lease, except for the Broker(s)
specified in the Basic Lease Information, and that it knows of no other real
estate broker, agent or finder who is or might be entitled to a real estate
brokerage commission or finder’s fee in connection with this Lease or otherwise
based upon contacts between the claimant and Tenant. Each party shall indemnify
and hold harmless the other from and against any and all Claims with respect to
a fee or commission by any real estate broker, agent or finder in connection
with the Premises and this Lease other than the Broker(s) (if any) resulting
from the actions of the indemnifying party. Unless expressly agreed to in
writing by Landlord and the Broker(s), no real estate brokerage commission or
finder’s fee shall be owed to, or otherwise payable to, the Broker(s) for any
renewals or other extensions of the initial


 


15

















 


term
of this Lease or for any additional space leased by Tenant other than the
Premises as same exists as of the Lease Date. Tenant further represents and
warrants to Landlord that Tenant will not receive (i) any portion of any  brokerage commission or finder’s fee payable to the Broker(s) in
connection with this Lease, or (ii) any other form of compensation or incentive
from the Broker (s) with respect to this Lease.


 


34.          Quiet Enjoyment


 


Landlord
covenants with Tenant, upon the paying of Rent and observing and keeping the
covenants, agreements and conditions of this Lease on its part to be kept, during
the periods that Tenant is not otherwise in Default of this Lease, and subject
to the rights of any of Landlord’s lenders, (i) that Tenant shall and may
peaceably and quietly have, hold, occupy and enjoy the Premises and Common
Areas during the Term, and (ii) neither Landlord, nor any successor or assign
of Landlord, shall disturb Tenant’s occupancy or enjoyment of the Premises and
Common Areas. The foregoing covenant is in lieu of any other covenant express
or implied.


 


35.          Rooftop Equipment


 


Provided
that this Lease is then in full force and effect, Tenant shall be permitted, subject
to the terms and conditions of the Lease and this Article 35 and approval by
all applicable governmental authorities, to install, maintain and operate, at
Tenant’s sole cost and expense, panel, whip or dish antennas (not to exceed six
(6) antennas) and associated equipment on the roof of the Building (collectively,
the “Rooftop Equipment”). The type, size, weight and precise location of the
Rooftop Equipment shall be subject to Landlord’s prior written approval, which
shall not be unreasonably withheld, conditioned or delayed, provided that all
of the Rooftop Equipment shall: (i) be at Tenant’s sole cost and expense, (ii) be
located on the portion of the roof directly above the Premises and shall not
extend above the height of the then existing antenna screening material, (iii) be
installed, maintained and operated to Landlord’s reasonable specifications and
in accordance with all Laws. Tenant shall submit to Landlord, for Landlord’s
prior written approval, all plans and specifications relating to all Rooftop
Equipment proposed by Tenant for installation. All work in connection with the
Rooftop Equipment shall be performed at Tenant’s sole cost and expense by
Landlord’s roof contractor or another contractor approved by Landlord in
Landlord’s sole discretion. All modifications to the Building, if  any,
including the portion of the roof designated by Landlord for the location of
the Dishes, and any rooftop penetrations required in connection with the
installation of the Rooftop Equipment shall be approved by Landlord in Landlord’s
sole but reasonable discretion, prior to the commencement of any work with
respect to the Rooftop Equipment. Tenant will obtain, at its sole cost and
expense, all Federal Communications Commission (“FCC”) and other licenses or
approvals required to install and operate the Rooftop Equipment and shall
repair any and all damage to the Project (including, but not limited to, the
roof of the Building) caused as a result of Tenant’s installation of the
Rooftop Equipment. The Rooftop Equipment is and shall remain the property of Tenant, and Landlord
and Tenant agree that the Rooftop Equipment are not, and installation of the
Rooftop Equipment at the Project shall not cause the Rooftop Equipment to
become, a fixture pursuant to this Lease or by operation of law. Tenant shall
not be entitled to receive any
income from any third-party
individual or entity for the use of the Rooftop Equipment. Tenant shall be
responsible for the operation, repair and maintenance of the Rooftop Equipment
during the Term, at Tenant’s sole cost and expense, and upon the expiration or
other termination of this Lease, Tenant shall remove the Rooftop
Equipment and repair any and all damage to the Project (including, but not
limited to, the roof of the Building) caused as a result of such removal, and
shall restore the roof and any other portion of the Building or Project
affected by the Rooftop Equipment to its original condition as of the initial
installation of the Rooftop Equipment. Tenant may not assign, lease, rent, sublet
or otherwise transfer any of its interest in the Rooftop Equipment or the
portion of the roof on which the Rooftop Equipment is
located. The rights granted to Tenant pursuant to this Section 35 are personal
to Tenant and shall terminate upon any assignment of this Lease or sublease of
all or any portion of the Premises (other than to an Affiliate). Each of the
other provisions of this Lease shall be applicable to the Rooftop Equipment and
Tenant’s use of the portion of the roof on which the Rooftop Equipment are
situated, including, without limitation, Section 10 and 13 and the Rules and Regulations. Tenant agrees to operate
the Rooftop Equipment in such a manner so as not to interfere with or impair
the operation of other antennas or telecommunication equipment of Landlord or
other tenants or occupants of the Project. For the purposes of this Section 35,
interference shall mean such interference as not permitted by the FCC. If
Tenant’s use of the Rooftop Equipment shall cause such interference or
impairment, Tenant shall, at its sole cost and expense, promptly eliminate such
condition, including, but not limited to, relocating the Rooftop Equipment to
an alternate location designated by Landlord, or otherwise. In the event
Landlord repairs or replaces the roof during the Term, Tenant will relocate or,
if necessary, remove the Rooftop Equipment from the roof at Tenant’s sole cost
upon receipt of written request from Landlord during the time of such repair or
replacement. Landlord shall use commercially reasonable efforts to avoid the
removal of the Rooftop Equipment during any such repair or replacement of the
roof. If removal of the Rooftop Equipment is required in connection with any roof repairs, Tenant shall be permitted to place the Rooftop
Equipment on the roof, at Tenant’s sole cost and expense and subject to the
terms and conditions of this Lease, including, without limitation, this Section
35, after Landlord completes repairing or replacing the roof. Landlord may have
its representative present at the installation or any reinstallation of the
Rooftop Equipment.


 


Landlord
assumes no liability or responsibility for interference with the Dishes caused
by other tenants placing similar equipment on the roof of any building in the
Project. The Dishes shall be included within the coverage of all insurance policies
required to be maintained by Tenant under the Lease and Tenant shall obtain at its
sole cost all permits required by governmental authorities for the Dishes. The
Dishes shall be used solely in connection with the business operations in the
Premises, and shall not be used by any party who is not a tenant of the
Premises. Tenant shall indemnify defend and hold harmless Landlord from any and
all claims, demands, liabilities, damages, costs and expenses (including
reasonable attorneys’ fees) Landlord may suffer or incur arising out of or
relating to the installation, use, operation, maintenance, replacement and/or
removal of the Rooftop Equipment or any portion thereof.


 


///signature page follows///


 


16

















 


///continued from previous page///


 


IN WITNESS WHEREOF, this Lease is executed by the parties as of the Lease Date specified in
the Basic Lease Information.


 


 


	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  ALTIGEN  COMMUNICATIONS, INC.,

  	
   

  	
  FSP
  MONTAGUE BUSINESS CENTER CORP.,

  
	
  a
  Delaware corporation

  	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jerry Fleming

  	
   

  	
  By:

  	
  /s/ George J. Carter

  
	
  Name:

  	
  Jerry Fleming

  	
   

  	
  Name:

  	
  George J. Carter

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Phil McDermott

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Phil McDermott

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Secretary

  	
   

  	
   

  	
   

  



 


 


[NOTE: If Tenant is a CORPORATION,
the authorized officers must sign on behalf of the corporation and indicate the
capacity in which they are signing. This Lease must be executed by the
president or vice-president and the secretary or assistant secretary, Unless
the bylaws or a resolution of the board of directors shall otherwise provide,
in which event, the bylaws or a certified copy of the resolution, as the case
may be, must be attached to this Lease.]


 

















 


Exhibit A

Premises


 


This exhibit, entitled “Premises”, is and shall constitute Exhibit A to that certain Lease Agreement dated April     ,
2009 (the “Lease”), by and
between FSP Montague Business Center Corp., a Delaware corporation (“Landlord”)
and AltiGen Communications, Inc., a Delaware corporation (“Tenant”) for the
leasing of certain premises located in the Montague Business Park at 410 East
Plumeria Drive, San Jose, California (the “Premises”).


 


The
Premises Consist of the rentable square footage of space specified in the Basic
Lease Information and has the address specified in the Basic Lease Information.
The Premises are a part of and are contained in the Building specified in the
Basic Lease Information. The cross-hatched area depicts the Premises within the
[Building, Project]:


 


[Picture of Premises]


 


1














 


Exhibit B


Tenant Improvements


 


This Exhibit B, entitled “Tenant Improvements,” is and shall constitute Exhibit B to that certain Lease Agreement, dated April            ,
2009 (the “Lease”), by and between FSP Montague Business Center Corp., a
Delaware corporation (“Landlord”), and AltiGen Communications, Inc., a
Delaware corporation (“Tenant”) for the leasing of certain premises located at
410 East Plumeria Drive, San Jose, California (the “Premises”). The terms, conditions
and provisions of this Exhibit B are hereby incorporated into and made a part
of this Lease. All capitalized terms used but not otherwise defined in this Exhibit B shaft have the meanings ascribed to them in
the Lease.


 


Tenant acknowledges and agrees that Tenant
shall accept the Premises in the condition set forth in Section 5 of the
Lease; provided, however, that Landlord shall construct certain modifications
to the interior of the Premises pursuant to the Approved Working Drawings in
accordance with the following provisions of this Exhibit B.


 


SECTION 1


 


CONSTRUCTION DRAWINGS FOR THE PREMISES


 


1.1           Final Space Plan, As
of the Lease Date, Landlord and Tenant have approved the detailed space plan
for construction of certain
improvements in the Premises, which space plan has been prepared by Doerr
Design Group (“Architect”) and is attached hereto as Schedule 2 and
incorporated herein by this reference (the “Final Space Plan”). On or prior to
thirty (30) days following execution and delivery of this Lease by Landlord and
Tenant, Tenant shall submit to Landlord, for Landlord’s approval, plans and
specifications relating to the Security System and Cabling (as such terms are
hereinafter defined).


 


1.2           Working Drawings. Based
upon and in conformity with the Final Space Plan, and the Building Standards
attached hereto as Schedule 1 and incorporated herein by this reference (“Building
Standards”), Landlord shall cause Architect and engineers (if necessary), to
prepare and deliver to Tenant, for Tenant’s approval subject to the terms
hereof, specifications and engineered working drawings containing sufficient
detail for the issuance of building permits for the tenant improvements shown
on the Final Space Plan (the “Working Drawings”). The Working Drawings shall incorporate
modifications to the Final Space Plan as necessary, in Landlord’s sole
discretion, to comply with the floor load and other structural and system
requirements of the Building and applicable requirements. To the extent that
the finishes and specifications are not completely set forth in the Final Space
Plan for any portion of the tenant improvements depicted thereon, the actual
specifications and finish work shall be in accordance with the Building
Standards. Within five (5) business days after Tenant’s receipt of the
Working Drawings, Tenant shall approve or disapprove the same; provided, however,
that Tenant may only disapprove the Working Drawings if: (a) the tenant improvements
shown on such Working Drawings are inconsistent with the Final Space Plan and
the Building Standards and do not constitute changes which would result in any
of the circumstances described in items (i) through (iv) below, and
(b) Tenant delivers to Landlord, within such five (5) business day
period, notice of Tenant’s disapproval and specific changes proposed by Tenant
which are consistent with the Final Space Plan and the Building Standards. If
Tenant falls to approve the Working Drawings within such five (5) business
day period (and has not notified Landlord of its disapproval in accordance with
the terms hereof), then Tenant shall be deemed to have approved such Working
Drawings. If any such revisions are timely and properly proposed by Tenant, Landlord
shall cause Architect and engineers (If necessary) to revise the Working
Drawings to incorporate such revisions and submit the same for Tenant’s
approval in accordance with the foregoing provisions, and the parties shall
follow the foregoing procedures for approving the Working Drawings until the same are finally approved by Landlord and Tenant. Upon
Tenant’s approval (or deemed approval) of the Working Drawings, the same shall
be known as the “Approved Working Drawings”.


 


1.3           Changes to Approved Working Drawings. Once
the Approved Working Drawings have been approved (or are deemed approved) by Tenant, neither party
shall make changes, change orders or modifications thereto without Tenant’s
reasonable and prompt consent (with respect to Landlord requested changes) or
the prior written consent of Landlord (with respect to Tenant requested
changes), which consent shall not be unreasonably withheld by Landlord; provided,
however, Tenant and Landlord acknowledge and agree that in the event any
governmental authority requires that changes be made to the Approved Working
Drawings as a condition to the issuance of a building permit  or otherwise, the
Approved Working Drawings shall be modified to comply with such governmental
authority requirements. Tenant acknowledges and agrees that it shall be
reasonable for Landlord to withhold Landlord’s consent to  any Tenant requested changes, if in Landlord’s reasonable discretion, such
change or modification would (i) be of a quality lower than the quality of
the Building Standards; and/or (ii) require any changes to the exterior of
the Building, systems or equipment of the Building (including, without
limitation, the mechanical, electrical and plumbing systems) or structural improvements
of the Building. Notwithstanding the foregoing, if Landlord approves of any
such change or modification proposed by Tenant to the Approved Working Drawings,
(a) Landlord may, require, as a condition to its approval, that Tenant pay
to Landlord, prior to the commencement of work relating to the changes or
modifications, any additional costs to be incurred by Landlord in connection
with such changes or modifications if the contemplated change will result in
the Tenant Improvement Costs (defined below) to exceed the Allowance, and in
such event Tenant shall be responsible only for the amount by which the Tenant
Improvement Costs is projected to exceed the Allowance; and (b) any
delays in the Substantial Completion of the  Tenant Improvements as a direct, indirect, partial
or total result of such changes or modifications shall be deemed a Tenant Delay (defined below).
The Final Space Plan, Working Drawings and Approved Working Drawings shall be
collectively referred to herein
as, the “Construction Drawings”. The tenant improvements shown on the Approved
Working  Drawings Shall be referred to herein as the “Tenant Improvements”.


 


SECTION 2


 


CONSTRUCTION AND PAYMENT FOR COSTS OF TENANT
IMPROVEMENTS


 


2.1           Contractor. Landlord shall cause a
general contractor selected by Landlord (“Contractor”) to (i) obtain all
applicable building permits for construction of the Tenant Improvements, and
(ii) construct the Tenant Improvements as depicted on
the Approved Working Drawings, in compliance with such building permits and all
applicable laws in effect at the time of construction, and in good workmanlike
manner.


 


                2.2           Payment of Tenant
Improvement Costs. Landlord shall pay for the cost of the
design, architectural/engineering,
permits, fees and construction of the Tenant Improvements in an amount up to
but not exceeding Four Hundred Forty Nine Thousand and 00/100 Dollars ($449,000.00)
(the  “Allowance”). As of the Lease Date, Landlord and Tenant have approved of
the preliminary budget attached hereto as Schedule 3 and incorporated
herein by this reference (the “Preliminary Budget”), which Preliminary Budget
sets forth an estimate, based upon the Final Space Plan, of all costs to be
expended by Landlord in connection with the construction of the Tenant
Improvements, including without limitation, all costs to be expended in
connection with the design, architecture/engineering, permits, fees and construction of the Tenant Improvements, Landlord’s Fee and
Tenant’s Project Manager Fee (as each term is defined below) (collectively, the
“Tenant Improvement Costs”). Tenant expressly acknowledges and agrees that the
Preliminary Budget is attached hereto without representation or warranty by
Landlord, and that the items and amounts set forth in the Preliminary Budget
may be subject to modification after the Lease Date. On or prior to  three
(3) days following Tenant’s notice to


 


1

















 


Landlord of its approval (or deemed approval) of
the Approved Working Drawings, Landlord shall prepare and deliver a final
budget (the “Final Budget”) to Tenant, which Final Budget shall not exceed the
Preliminary Budget and shall be prepared based upon the Approved Working
Drawings, and shall include but not be limited to the Tenant Improvement Costs.
Thereafter, Landlord shall notify Tenant in writing of any changes to the
Approved Working Drawings that are required by any governmental authority and
deliver Landlord’s written estimate of the increase (if any) in Tenant
Improvement Costs as a result of such required
changes. In the event the Tenant Improvement Costs exceed the Allowance as a
result of such required changes, Tenant shall have the right to request changes
to the Approved Working Drawings in order to reduce Tenant Improvement Costs (and
Landlord and Landlord’s Contractor will cooperate reasonably with Tenant in
attempting to identify cost reductions);
provided, if following such efforts, the Tenant Improvement Costs continue to
exceed the Allowance, such excess shall be paid by Tenant to Landlord within
five (5) business days after written notification by Landlord to Tenant (the
“Estimated Over-Allowance Amount”). Upon completion of the Tenant Improvements,
Landlord shall prepare a final billing setting forth the total Tenant
Improvement Costs (collectively, the “Final Cost”) and Tenant shall pay to
Landlord in cash, within five (5) business days following Landlord’s
delivery to Tenant of the statement of Final Cost, the amount, if any, by which
the Final Cost exceeds the Allowance (the “Over-Allowance Amount”), less any
amounts previously paid by Tenant to Landlord for any Estimated Over-Allowance
Amount (and in the event Tenant has overpaid any Estimated Over-Allowance
Amounts, Landlord shall promptly refund such overpayments to Tenant). The Final
Cost shall include, without limitation all costs incurred by Landlord in
completing the Tenant Improvement including but not limited to permits, fees, architecture/engineering
fees, and (a) Landlord’s construction supervision and management fee (“Landlord’s
Fee”) in an amount equal to the product of (i) two and one-half percent (2-1/2%)
and (ii) the cost of constructing the Tenant Improvements as detailed in the final
billing from Contractor and (b) if prior to commencement of construction, Tenant
has advised Landlord in writing that Tenant has hired a project manager (“Tenant’s
Project Manager), a construction and management fee (“Tenant’s Project Manager
Fee”) payable to Tenant’s Project Manager, in an amount not to exceed Ten
Thousand Dollars ($10,000.00). If the Final Cost is less than the Allowance (subject
to the limitations set forth below relating to the Security System Cap Amount
and the Cabling Cap Amount), Tenant shall have the right to utilize the
remaining portion of the Allowance for additional improvements Tenant desires
to the Premises so long as such improvement work is performed within six
(6) months following the Commencement Date. Tenant and Landlord shall
agree upon the party performing such work and the method of payment therefor (i.e., reimbursement of
Tenant if Tenant performs the work or payment by Landlord if Landlord performs
the work). Except as set forth in the immediately preceding sentence, Tenant
shall not be entitled to receive in cash or, as a credit against any rental or
otherwise, any portion of the Allowance not used to pay for the costs of the
design and construction of the Tenant Improvements.


 


2.3           Security System and Cabling. The
Tenant Improvements shall include (i) a separate security system for the
Premises (the “Security System”) and
(ii) data/telephone cabling for the Premises (the “Initial Cabling”), which
shall be detailed in plans and specifications (to be submitted to and approved
by Landlord) prepared by Platinum Builders, the subcontractor chosen by Tenant
(“Tenant’s Subcontractor”) prior to any commencement of construction work
associated with either the Security System or Initial Cabling. In  no event shall the Allowance be utilized to pay for amounts in excess of:
(a) Fifty Thousand Dollars ($50,000.00) (the “Cabling Cap Amount”), or
(b) Six Thousand Five Hundred Dollars ($6,500.00) (the “Security System
Cap Amount”), for the work associated with installation of the Initial Cabling
or Security System, respectively. Landlord shall cause Contractor to enter into
a contract with Tenant’s Subcontractor to perform the construction and
installation of the Initial Cabling and the Security System during the course
of construction of the Tenant Improvements; provided, for purposes of this
Lease, “Substantial Completion” of the Tenant Improvements shall be deemed to
occur upon Substantial Completion of the Tenant Improvements (excluding the
Initial Cabling and Security System) and in no event shall the Commencement
Date be delayed, or Tenant be entitled to any compensation or damages or
abatement of Rent as a result of the completion of the Security System and
Initial Cabling after the Substantial Completion of the Tenant Improvements. Landlord
shall have the right to confirm that
Tenant’s Subcontractor is
licensed and in good standing in the State of California, and insured in
accordance with the insurance requirements of Landlord.


 


2.4           Moving Allowance. In
no event shall Landlord be obligated to pay for any of Tenant’s furniture, computer
systems, telephone systems, equipment or other personal property which may be
depicted on the Construction Drawings; and all of such items shall be paid for
by Tenant; provided, however, in addition to Landlord’s obligation to
contribute the Allowance to the Tenant Improvement Costs and Final Cost, as set
forth above, Tenant shall have the right to receive up to One Hundred Twenty
Five Thousand Dollars ($125,000.00) (the “Moving Allowance”), to reimburse
Tenant for its actual out-of-pocket costs (as evidenced by written invoices
from third party vendors) of (a) the purchase and installation of
furniture, fixtures and equipment (the “FF & E”) for the Premises and (b) Tenant’s
moving expenses, such as the hiring of movers, furniture installation and such
other moving expenses (collectively, “Tenant’s Moving Expenses”), all as may be
reasonably approved by Landlord. Landlord shall reimburse Tenant for the costs
of purchase and installation of the FF & E and Tenant’s Moving Costs
within fifteen (15) days of Landlord’s receipt of (i) copies of invoices
from third party vendors evidencing
Tenant’s payment in full of such FF& E and Tenant’ Moving Costs; (ii) satisfactory
evidence of lien free completion of any work performed in connection with the installation
of such FF & E; and (iii) to the extent applicable to the work
performed, unconditional lien release(s) from any applicable vendors. Landlord’s
obligation to pay Tenant the Moving Allowance, as provided herein, shall be
subject to Tenant’s submission to Landlord of the foregoing documentation in
connection with the FF &E and Tenant’s Moving Expenses on or prior to
six (6) months following the Commencement Date. Notwithstanding anything
to the contrary contained herein, any FF & E, the cost of which
Landlord has reimbursed Tenant for pursuant to the terms of this Section 2.4,
shall be deemed to be the property of Landlord immediately upon its acquisition
and/or installation by Tenant in the Premises, and shall be surrendered with
the Premises upon the expiration or earlier termination of the Lease. For
purposes of this Lease, Landlord and Tenant agree that the FF & E
owned by Landlord pursuant to the terms hereof, shall be the FF & E
described on the invoices submitted by Tenant to Landlord pursuant to the terms
of this Section 2.4. Notwithstanding the foregoing, Tenant shall be
responsible for maintaining and keeping such FF & E in good working order
and condition throughout the Term, and Landlord shall have no responsibility
with respect to the insurance, repair and/or maintenance of such FF &
E.


 


SECTION 3


 


SUBSTANTIAL
COMPLETION OF THE TENANT IMPROVEMENTS


 


“Substantial Completion” of
the Tenant Improvements shall occur upon the (i) completion of construction
of the Tenant Improvements (excluding the Initial Cabling and Security System) in
the Premises pursuant to the Approved Working Drawings, with the exception of
any punch list items and any tenant fixtures, work-stations, built-in furniture,
or equipment to be installed by Tenant or under the supervision of Contractor
and-(ii) delivery of possession of the Premises to
Tenant.


 


SECTION 4


 


TENANT
DELAYS


 


If there shall be a delay or there are delays
in the Substantial Completion of the Tenant Improvements as a direct, indirect,
partial or total result of any of the following (collectively, “Tenant Delays”):


 


(a)                                  Tenant’s failure to timely approve the Working
Drawings, the Preliminary Budget or any other matter requiring Tenant’s
approval in accordance with the terms of this Tenant Exhibit B;


 


2

















 


(b)                                 A breach by Tenant of the terms of this Exhibit B
or the Lease;


 


(c)                                  Tenant’s request for changes in the Approved
Working Drawings after construction has commenced;


 


(d)                                 Tenant’s requirement for materials, components,
finishes or improvements which are not available in a commercially reasonable
time, provided that if any such materials, components, finishes or improvements
are not available, Landlord shall inform Tenant of such unavailability and such
unavailability shall be a “Tenant Delay” in the event that Landlord notifies
Tenant that such materials are not available and Tenant does not accept or
propose an available alternative; or


 


(e)                                  Any other acts or omissions of Tenant, its
agents or employees;


 


then, notwithstanding anything to the contrary
set forth in the Lease and regardless of the actual date of Substantial
Completion, the Commencement Date shall be deemed to be the date the
Commencement Date would have occurred if no Tenant Delay or Delays, as set
forth above, had occurred and Tenant shall pay to Landlord, within ten
(10) days following written demand therefor, all costs and expenses
arising from or related to such Tenant Delays.


 


SECTION
5


 


MISCELLANEOUS


 


5.1           Tenant’s Entry Into the Premises Prior to
Substantial Completion. Provided
that Tenant and its agents do not interfere with, or delay, Contractor’s work in
the Building or the Premises, Landlord shall allow Tenant access to the
Premises five (5) days prior to the Commencement Date for the purpose of
Tenant installing overstandard equipment or fixtures (including Tenant’s data
and telephone equipment) in the Premises and preparing the Premises for Tenant’s
occupancy. Prior to Tenant’s entry into the Premises as permitted by the terms
of this Section 5.1, Tenant shall submit a schedule to Landlord and
Contractor, for their approval, which schedule shall detail the timing and
purpose of Tenant’s entry. Tenant shall hold Landlord harmless from and indemnify,
protect and defend Landlord against any claim, liability, judgment, loss, damage,
cost or expense (including attorneys’ fees) arising from or related to Tenant’s
entry.


 


5.2           Tenant’s Representative. Tenant has designated Phil McDermott as its
sole representative with respect to the matters set forth in this Tenant Exhibit B, who shall have
full authority and responsibility to act on behalf of the Tenant as required in
this Tenant Exhibit B.


 


5.3           Landlord’s Representative. Landlord has designated Mike Tamas as its sole
representative with respect to the matters
set forth in this Exhibit
B, who, until further notice to Tenant, shall
have full authority and responsibility to act on behalf of the Landlord as
required in this Exhibit B.


 


5.4           Time of the Essence. Unless otherwise indicated, all references herein to a “number of
days” shall mean and refer to
calendar days. In all instances where Tenant is required to approve or deliver
an item, if no written notice of approval is given or the item is not delivered
within the stated time period, at Landlord’s sole option, at the end of said
period the item shall automatically be deemed approved or delivered by Tenant
and the next succeeding time period shall commence.


 


5.5           Tenant’s Lease Default. Notwithstanding any provision to the
contrary contained in the Lease, if there shall have occurred a Default under this Lease, including without limitation, this
Exhibit B, at any time on or before the Substantial Completion of
the Tenant Improvements, then (i) in addition to all other rights and
remedies granted to Landlord pursuant to the Lease, Landlord may cause
Contractor to cease the construction of the Tenant Improvements until such time
as such Default is cured pursuant to the terms of the Lease (in which case, Tenant
shall be responsible for any delay in the Substantial Completion caused by such
work stoppage), and (ii) all other obligations of Landlord under the terms
of this Exhibit B shall be forgiven until such time as such Default
is cured pursuant to the terms of the Lease.


 


3

















 


Exhibit C


Rules &
Regulations


 


This exhibit, entitled “Rules &
Regulations”, is and shall constitute Exhibit C to that certain Lease
Agreement dated for reference purposes as of
April     , 2009 (the “Lease”), by and between FSP
Montague Business Center Corp., a Delaware corporation (“Landlord”) and AltiGen
Communications, Inc., a Delaware corporation (“Tenant”) for the leasing of
certain premises located in the Montague Business Park at 410 East Plumeria Drive,
San Jose, California (the “Premises”). The terms, conditions and provisions of
this Exhibit C are hereby
incorporated into and are made a part of the Lease. Any capitalized terms used
herein and not otherwise defined herein shall have the meaning ascribed to such
terms as set forth in the Lease:


 


1.             Subject to Section 30 of the Lease, no
advertisement, picture or sign of any sort shall be displayed on or outside the
Premises or the Building without the prior written consent of Landlord. Landlord
shall have the right to remove any such unapproved item without Notice and at
Tenant’s expense.


 


2.             Tenant shall park motor vehicles in those
general parking areas, as designated by Landlord, except for loading and
unloading. During those periods of loading and unloading, Tenant shall not
unreasonably interfere with (i) traffic flow within the Project and
(ii) loading and unloading activities of other tenants. Tenant shall not
regularly park motor vehicles in designated parking areas after the conclusion
of normal daily business activity.


 


3.             Tenant shall not use any method of heating or
air conditioning other than that supplied by Landlord without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.


 


4.              All window coverings installed by Tenant and
visible from the outside of the Building require the prior written approval of
Landlord.


 


5.              Subject to Section 27 of the Lease,
Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or
substance or any flammable or combustible materials in or around the Premises,
the Building or any portion of the Project.


 


6.              Tenant shall not alter any lock or install any
new locks or bolts on any door at the Premises without the prior consent of
Landlord. Tenant agrees not to make any duplicate keys without the prior
consent of Landlord.


 


7.              Tenant shall not disturb, solicit or canvas
any occupant of the Project and shall cooperate to prevent same.


 


8.              No person shall go on the roof without prior
notice to and scheduling with Landlord. Landlord shall have the right to
require that all such persons be accompanied by Landlord’s representative.


 


9.              Business machines and mechanical equipment
belonging to Tenant which cause noise or vibration that may be transmitted to
the structure of the Building, to such a degree as to be objectionable to
Landlord or other tenants, shall be placed and maintained by Tenant, at
Tenant’s expense, on vibration eliminators or other devices sufficient to
eliminate noise or vibration.


 


10.            All goods, including material used to store
goods, delivered to the Premises shall be immediately moved into the Premises
and shall not be left in parking or receiving areas overnight. Tenant shall not
store or permit the storage or placement of goods, merchandise, pallets or
equipment of any sort outside of the Premises, Building or in any of the Common
Areas. No displays or sales of merchandise are allowed in the parking lots or
other portions of the Common Areas.


 


11.            Tractor trailers which must be unhooked or
parked with dolly wheels beyond the concrete loading areas must use steel
plates or wood blocks under the dolly wheels to prevent damage to the asphalt
paving surfaces. No parking or storing of such trailers will be permitted in
the auto parking areas of the Project or on streets adjacent thereto.


 


12.            Forklifts which operate on asphalt paving
areas shall not have solid rubber tires and shall only use tires that do not
damage the asphalt.


 


13.            Tenant is responsible for the storage and
removal of all trash and refuse. All such trash and refuse shall be contained
in suitable receptacles and stored behind screened enclosures at locations
approved by Landlord.


 


14.            Tenant shall not permit any animals,
including, but not limited to, any household pets, to be brought or kept in the
Premises, Building, Common Areas or Project.


 


15.            Tenant shall not permit (i) any motor
vehicles to be washed in any portion of the Premises or Common Areas, and (ii)
any mechanical work or maintenance of motor vehicles to be performed in any
portion of the Premises or Common Areas.


 


1














 


Exhibit D

Hazardous Materials Disclosure Certificate


 


Your
cooperation in this matter is appreciated. Initially, the information provided
by you in this Hazardous Materials Disclosure Certificate is necessary for the
Landlord (identified below) to evaluate and finalize a lease agreement with you
as Tenant. After a lease agreement is signed by you and the Landlord (the “Lease
Agreement”), on an annual basis in accordance with the provisions of Section 27
of the signed Lease Agreement, you are to provide an update to the information
initially provided by you in this certificate. The information contained in the
initial Hazardous Materials Disclosure Certificate and each annual certificate
provided by you thereafter will be maintained in confidentiality by Landlord
subject to release and disclosure as required by (i) any lenders and
owners and their respective environmental consultants, (ii) any
prospective purchaser(s) of all or any portion of the property on which
the Premises are located, (iii) Landlord to defend itself or its lenders,
partners or representatives against any claim or demand, and (iv) any laws,
rules, regulations, orders, decrees, or ordinances, including, without
limitation, court orders or subpoenas. Any and all capitalized terms used
herein, which are not otherwise defined herein, shall have the same meaning
ascribed to such term in the signed Lease Agreement. Any questions regarding
this certificate should be directed to, and when completed, the certificate
should be delivered to:


 


Landlord:
FSP Montague Business Center Corp., a Delaware corporation


 


 


Name
of (Prospective) Tenant: AltiGen Communications, Inc., a Delaware
corporation


 


Mailing
Address: 410 East Plumeria Drive, San Jose, California 95314


 


Contact Person, Title and Telephone Number(s):


 


Contact
Person for Hazardous Waste Materials Management and Manifests and Telephone
Number(s):


 


 


Address
of (Prospective) Premises: 410 East Plumeria Drive, San Jose, California


 


Length
of (Prospective) Initial Term: Five (5) years


 


	
  1.

  	
  General
  Information:

  
	
   

  	
   

  
	
   

  	
  Describe
  the initial proposed operations to take place in, on, or about the Premises,
  including, without limitation, principal products processed, manufactured or
  assembled services and activities to be provided or otherwise conducted.
  Existing Tenants should describe any
  proposed changes to on-going
  operations.

  
	
   

  	
   

  
	
   

  	
   

  
	
  2.

  	
  Use,
  Storage and Disposal of
  Hazardous Materials

  
	
   

  	
   

  
	
   

  	
  2.1

  	
  Will
  any Hazardous Materials be used, generated, stored or disposed of in, on or
  about the Premises? Existing Tenants should describe any Hazardous Materials
  which continue to be used, generated, stored or disposed of in, on or about
  the Premises.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wastes

  	
   

  	
  Yes
  o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
  Chemical
  Products

  	
   

  	
  Yes
  o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
  Other

  	
   

  	
  Yes
  o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If
  Yes is marked, please explain:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.2

  	
  If
  “Yes” is marked in Section 2.1, attach a list of any Hazardous Materials
  to be used, generated, stored or disposed of in, on or about the Premises,
  including the applicable hazard class and an
  estimate of the quantities of such Hazardous Materials at any given time;
  estimated annual throughout; the proposed location(s) and method of
  storage (excluding nominal amounts of ordinary household cleaners and
  janitorial supplies which are not regulated by any Environmental Laws); and
  the proposed location(s) and method of disposal for each Hazardous
  Material, including, the estimated frequency, and the proposed contractors or
  subcontractors. Existing Tenants should attach a list setting forth the
  information requested above and such list should include actual data from on-going
  operations and the identification of any variations in such information from
  the prior year’s certificate.

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Storage Tanks and Sumps

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Is
  any above or below ground storage of gasoline, diesel, petroleum, or other
  Hazardous Materials in tanks or sumps proposed in, on or about the Premises?
  Existing Tenants should describe any such actual or proposed activities.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If
  yes, please explain:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Waste Management

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Has
  your company been issued an EPA Hazardous Waste Generator I.D. Number?
  Existing Tenants should describe any additional identification numbers issued
  since the previous certificate.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.2

  	
  Has
  your company filed a biennial or quarterly reports as a hazardous waste
  generator? Existing Tenants should describe any new reports filed.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If
  yes, attach a copy of the most recent report filed.

  
									



 


1

















 


	
  5.

  	
  Wastewater Treatment and Discharge

  
	
   

  	
   

  
	
   

  	
  5.1

  	
  Will
  your company discharge wastewater or other wastes to:

  
	
   

  	
   

  	
           
  storm drain?

  	
   

  	
           
  sewer?

  
	
   

  	
   

  	
           
  surface water?

  	
   

  	
           
  no wastewater or other wastes discharged.

  
	
   

  	
   

  
	
   

  	
  Existing Tenants should indicate
  any actual discharges. If so, describe
  the nature of any proposed or actual discharge(s).

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  5.2

  	
  Will
  any such wastewater or waste be treated before discharge?

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If yes, describe the type
  of treatment proposed to be conducted. Existing Tenants should describe the
  actual treatment conducted.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
							



 


	
  6.

  	
  Air Discharges

  
	
   

  	
   

  
	
   

  	
  6.1

  	
  Do you plan for any air
  filtration systems or stacks to be used in your company’s operations in, on
  or about the Premises that will discharge into the air; and will such air
  emissions be monitored? Existing Tenants should indicate whether or not there
  are any such air filtration systems or stacks in use in, on or about the
  Premises which discharge into the air and whether such air emissions are
  being monitored.

  



 


	
   

  	
   

  	
  Yes
  o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If
  yes, please describe:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.2

  	
  Do
  you propose to operate any of the following types of equipment, or any other
  equipment requiring an air emissions permit? Existing Tenants should specify
  any such equipment being operated in, on
  or about the Premises.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
           
  Spray booth(s) 

  	
   

  	
           
  Incinerator(s)

  
	
   

  	
   

  	
           
  Dip tank(s) 

  	
   

  	
           
  Other (Please describe)

  
	
   

  	
   

  	
           
  Drying oven(s)

  	
   

  	
           
  No Equipment Requiring Air Permits

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If yes, please describe:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
							



 


	
  7.

  	
  Hazardous Materials Disclosures

  
	
   

  	
   

  
	
   

  	
  7.1

  	
  Has
  your company prepared or will it be required to prepare a Hazardous Materials
  management plan (“Management Plan”) pursuant to Fire Department or other governmental
  or regulatory agencies’ requirements? Existing Tenants should indicate
  whether or not a Management Plan is required and has been prepared.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If yes, attach a copy of
  the Management Plan. Existing Tenants should attach a copy of any required
  updates to the Management Plan.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Are
  any of the Hazardous Materials, and in particular chemicals, proposed to be
  used in your operations in, on or about the Premises regulated under
  Proposition 65? Existing Tenants should indicate whether or not there are any
  new Hazardous Materials being so used which are regulated under Proposition
  65.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If
  yes, please explain:

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
  8.

  	
  Enforcement Actions and Complaints

  
	
   

  	
   

  
	
   

  	
  8.1

  	
  With
  respect to Hazardous Materials or Environmental Laws, has your company ever
  been subject to any-agency enforcement actions, administrative orders, or
  consent decrees or has your company received requests for information, notice
  or demand letters, or any other inquiries regarding its operations? Existing
  Tenants should indicate whether or not any such actions, orders or decrees
  have been, or are in the process of being, undertaken or if any such requests
  have been received.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If yes, describe the
  actions, orders or decrees and any continuing compliance obligations imposed
  as a result of these actions, orders or decrees and also describe any
  requests, notices or demands, and attach a copy of all such documents.
  Existing Tenants should describe and attach a copy of any new actions,
  orders, decrees, requests, notices or demands not already delivered to
  Landlord pursuant to the provisions of Section 27 of the signed Lease Agreement.

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 


	
   

  	
  8.2

  	
  Have
  there ever been, or are there now pending, any lawsuits against your company
  regarding any environmental or health and safety concerns?

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If yes, describe any such
  lawsuits and attach copies of the complaint(s), cross-complaint(s), pleadings
  and all other documents related thereto as requested by Landlord. Existing
  Tenants should describe and attach a copy of any new complaint(s),
  cross-complaint(s), pleadings and other related documents not already
  delivered to Landlord pursuant to the provisions of Section 27 of the
  signed Lease Agreement.

  
	
   

  	
   

  
	
   

  	
   

  



 


2

















 


	
   

  	
  8.3

  	
  Have
  there been any problems or
  complaints from adjacent Tenants, owners or other neighbors at your company’s
  current facility with regard to environmental or health and safety concerns?
  Existing Tenants should indicate whether or not there have been any such
  problems or complaints from adjacent Tenants, owners or other neighbors at,
  about or near the Premises.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yes o

  	
   

  	
  No
  o

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  If yes, please describe. Existing Tenants
  should describe any such problems or complaints not already disclosed to
  Landlord under the provisions of the signed Lease Agreement.

  
	
   

  	
   

  
	
   

  	
   

  
	
  9.

  	
  Permits and Licenses

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Attach
  copies of all Hazardous Materials permits and licenses including a
  Transporter Permit number issued to your company with respect to its proposed
  operations in, on or about the Premises, including, without limitation, any
  wastewater discharge permits, air emissions permits, and use permits or
  approvals. Existing Tenants should attach copies of any new permits and
  licenses as well as any renewals of permits or licenses previously issued.

  



 


The
undersigned hereby acknowledges and agrees that (A) this Hazardous
Materials Disclosure Certificate is being delivered in connection with, and as
required by, Landlord in connection with the evaluation and finalization of a
Lease Agreement and will be attached thereto as an exhibit; (B) that this
Hazardous Materials Disclosure Certificate is being delivered in accordance
with, and as required by, the provisions of Section 27 of the Lease
Agreement; and (C) that Tenant shall have and retain full and complete responsibility
and liability with respect to any of the Hazardous Materials disclosed in the
HazMat Certificate notwithstanding Landlord’s/Tenant’s receipt and/or approval
of such certificate. Tenant further agrees that none of the following described
acts or events shall be construed or otherwise interpreted as either (a) excusing,
diminishing or otherwise limiting Tenant from the requirement to fully and
faithfully perform its obligations under the Lease with respect to Hazardous
Materials, including, without limitation, Tenant’s indemnification of the
Indemnitees and compliance with all Environmental Laws, or (b) imposing
upon Landlord, directly or indirectly, any duty or liability with respect to
any such Hazardous Materials, including, without limitation, any duty on
Landlord to investigate or otherwise verify the accuracy of the representations
and statements made therein or to ensure that Tenant is in compliance with all
Environmental Laws; (i) the delivery of such
certificate to Landlord and/or Landlord’s acceptance of such
certificate, (ii) Landlord’s review and approval of such certificate, (iii)
Landlord’s failure to obtain such certificate from Tenant at any time, or (iv) Landlord’s
actual or constructive knowledge of
the types and quantities of Hazardous Materials being used, stored, generated,
disposed of or transported on or about the Premises by Tenant or Tenant’s
Representatives. Notwithstanding the foregoing or anything to the contrary
contained herein, the undersigned acknowledges and agrees that Landlord and its
partners, lenders and representatives may, and will, rely upon the statements,
representations, warranties, and certifications made herein and the
truthfulness thereof in entering into the Lease Agreement and the continuance
thereof throughout the term, and any renewals thereof, of the Lease Agreement.


 


I
(print name)
                                            ,
acting with full authority to bind the (proposed) Tenant and on behalf of the
(proposed) Tenant, certify, represent and warrant that the information
contained in this certificate is true and correct.


 


(Prospective) Tenant:


 


	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  



 


3

















 


Exhibit E

First Amendment to Lease Agreement

Change of Commencement Date


 


This First Amendment to Lease Agreement (the “Amendment”) is made and
entered into to be effective as
of
               ,
by and between FSP Montague Business Center Corp., a Delaware corporation (“Landlord”) and AltiGen
Communications, Inc., a Delaware corporation (“Tenant”), with reference to the
following facts:


 


Recitals


 


A.         Landlord and Tenant have
entered into that certain Lease Agreement dated
               ,
2009 (the “Lease”), for the leasing of certain premises containing
approximately                
rentable square feet of space located at
               ,
San Jose, California (the “Premises”), as such Premises are more fully
described in the Lease.


 


B.          Landlord and Tenant
wish to amend the Commencement
Date of the Lease.


 


NOW, THEREFORE, In consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant hereby agree as follows:


 


1.          Recitals:
Landlord and Tenant agree that the above recitals are true and correct.


 


2.          The Commencement Date
of the Lease shall be
                              .


 


3.          The last day of the
Term of the Lease (the “Expiration Date”) shall be
                        .


 


4.          The dates on which the
Base Rent will be adjusted are:


 


for the period
             
to
              the
monthly Base Rent shall be
$               ;


for the period
              to
              the
monthly Base Rent shall be
$             ;
and


for the period
              to
              the
monthly Base Rent shall be $               .


 


5.          Effect of
Amendment: Except as modified herein, the terms and conditions
of the Lease shall remain unmodified and continue in full force and effect. In the event of any conflict between the terms and conditions of the Lease
and this Amendment, the terms and conditions of this Amendment shall prevail.


 


6.          Definition:
Unless otherwise defined in this Amendment, all terms not defined in this
Amendment shall have the meaning set forth in the Lease.


 


7.          Authority:
Subject to the provisions of the Lease, this Amendment shall be binding upon
and inure to the benefit of the parties hereto, their respective heirs, legal
representatives, successors and assigns. Each party hereto and the persons
signing below warrant that the person signing below on such party’s behalf is
authorized to do so and to bind such party to the terms of this Amendment.


 


8.          The terms and
provisions of the Lease are hereby incorporated in this Amendment.


 


IN
WITNESS WHEREOF, the parties have executed this Amendment as of the date and
year first above written.


 


	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  AltiGen
  Communications, Inc.,

  a Delaware corporation

  	
   

  	
  FSP
  MONTAGUE BUSINESS CENTER CORP.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  



 


1














 


Addendum 1


Letter of Credit


 


This
LETTER OF CREDIT Addendum (“LC Addendum”) is made and entered into by and
between FSP Montague Business Center Corp., a Delaware corporation (“Landlord”)
and AltiGen Communications, Inc., a Delaware corporation (“Tenant”), and
is dated as of the date of the Lease Agreement (“Lease”) by and between
Landlord and Tenant to which this LC Addendum is attached. The agreements set
forth in this Letter of Credit Addendum shall have the same force and effect as
if set forth in the Lease. To the extent the terms of this LC Addendum are
inconsistent with the terms of the Lease, the terms of this LC Addendum shall
control.


 


1.             Concurrently with
Tenant’s execution of the Lease, Tenant
shall deliver to Landlord, as collateral for the full and faithful performance
by Tenant of all of its obligations under the Lease and to compensate Landlord
for all losses and damages Landlord may suffer as a result of any Default by
Tenant under the Lease, an irrevocable and unconditional negotiable standby
letter of credit (the “Letter of Credit”), in the form attached hereto as Exhibit 1 and containing
the terms required herein, payable in the greater San Francisco Bay Area,
running in favor of Landlord issued by Wells Fargo Bank, N.A., or a solvent,
nationally recognized bank with a long term rating of BBB or higher as rated by
Moody’s Investors Service or Standard & Poor’s, under the supervision
of the Superintendent of Banks of the State of California, or a
national banking association (“Bank”), In the amount of One Hundred Thousand
Dollars ($100,000.00) (the “Letter of Credit Amount”). The Letter of Credit shall
be (i) at sight, irrevocable and unconditional, (ii) maintained in
effect, whether through replacement, renewal or extension, for the period from
the Lease Commencement Date and continuing until the date (the “LC Expiration
Date”) which is sixty (60) days after the Lease Expiration Date, and Tenant
shall deliver a new Letter of Credit or certificate of renewal or extension to
Landlord at least twenty (20) days prior to the expiration of the Letter of
Credit then held by Landlord, without any action whatsoever on the part of Landlord, (iii)
subject to the International Standby Practice (1998 Revision) International
Chamber of Commerce Publication #590, (iv) fully assignable by Landlord,
and (v) permit partial draws. In addition to the foregoing, the form and
terms of the Letter of Credit and the Bank shall be acceptable to Landlord, in
Landlord’s reasonable discretion, and shall provide, among other things, in
effect that: (A) Landlord,
or its then managing agent, shall have the right to draw down an amount up to
the face amount of the Letter of Credit (1) upon the presentation to the
Bank of Landlord’s (or Landlord’s then managing agent’s) written statement that
such amount is due to Landlord under the terms and conditions of the Lease, or (2) in
the event Tenant, as applicant, shall
have failed to provide to Landlord a new or renewal Letter of Credit satisfying
the terms of this LC Addendum at least twenty (20) days prior to the expiration
of the Letter of Credit then held by Landlord, it being understood that if
Landlord or its managing agent be a limited liability company, corporation,
partnership or other entity, then such statement shall be signed by a managing
member (if a limited liability company), an officer (if a corporation), a
general partner (if a partnership),
or any authorized party (if another entity) and (B) the Letter of Credit will
be honored by the Bank without inquiry as to the accuracy thereof and
regardless of whether Tenant disputes the content of such statement.


 


2.             The Letter of Credit
shall also provide that Landlord may, at any time and without notice to Tenant
and without first obtaining Tenant’s consent thereto, transfer all or any
portion of its interest in and to the Letter of Credit to another party, person
or entity, regardless of whether or not such transfer is separate from or as a
part of the assignment by Landlord of its rights and interests in and to the
Lease. In the event of a transfer of Landlord’s interest in the Building,
Landlord shall transfer the Letter of Credit, in whole or in part (or cause a substitute letter of credit to be delivered, as applicable) to the
transferee and thereupon Landlord shall, without any further agreement between
the parties, be released by Tenant from all liability therefor, and it is
agreed that the provisions hereof shall apply to every transfer or assignment
of the whole or any portion of said Letter of Credit to a new landlord. In
connection with any such transfer of the Letter of Credit by Landlord, Tenant
shall, at Tenant’s sole cost and expense, execute and submit to the Bank such
applications, documents and instruments as may be necessary to effectuate such
transfer and, Tenant shall be responsible for paying the Bank’s transfer and
processing fees in connection therewith.


 


3.             If, as result of any
application or use by Landlord of all or any part of the Letter of Credit, the
amount of the Letter of Credit shall be less than the Letter of Credit Amount,
Tenant shall, within five (5) days thereafter, provide Landlord with
additional letter(s) of credit in an amount equal to the deficiency (or a
replacement letter of credit in the total Letter of Credit Amount), and any
such additional (or replacement) letter of credit shall comply with all of the
provisions of this LC Addendum, and if Tenant fails to comply with the
foregoing, notwithstanding anything to the contrary contained in Section 18
of the Lease, the same shall constitute an incurable default by Tenant. Tenant
further covenants and warrants
that it will neither assign nor encumber the Letter of Credit or any part
thereof and that neither Landlord nor its successors or assigns will be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance. Without limiting the generality of the foregoing, if the Letter of
Credit expires earlier than the LC Expiration Date, a renewal thereof or
substitute letter of credit, as applicable, shall
be delivered to Landlord not later than twenty (20) days prior to the
expiration of the Letter of Credit, which shall be irrevocable and
automatically renewable as above provided through the LC Expiration Date upon
the same terms as the expiring Letter of Credit. However, if the Letter of
Credit is not timely renewed or a substitute letter of credit is not timely
received, or if Tenant falls to maintain the Letter of Credit in the amount and
in accordance with the terms set forth in this LC Addendum, Landlord shall have
the right to present the Letter of Credit to the Bank in accordance with the
terms of this LC Addendum, and the proceeds of the Letter of Credit may be
applied by Landlord for Tenant’s failure to fully and faithfully perform all of
Tenant’s obligations under this Lease and against any Rent payable by Tenant
under this Lease that is not paid when due and/or to pay for all losses and
damages that Landlord has suffered or that Landlord reasonably estimates that
it will suffer as a result of any Default by Tenant under this Lease. Any
unused proceeds shall constitute the property of Landlord and need not be
segregated from Landlord’s other assets.


 


4.             Tenant hereby
acknowledges and agrees that Landlord is entering into the Lease in material
reliance upon the ability of Landlord to draw upon the Letter of Credit in the
event Tenant fails to fully and faithfully perform all of Tenant’s obligations under this Lease and to compensate
Landlord for all losses and damages Landlord may suffer as a result of the
occurrence of any Default on the part of Tenant under the Lease and Landlord
may, at any time, but without obligation to do so, and without notice, draw
upon the Letter of Credit, in part or in whole, for such purposes. Tenant
agrees not to interfere in any way with payment to Landlord of the proceeds of
the Letter of Credit, either prior to or following a “draw” by Landlord of any
portion of the Letter of Credit, regardless of whether any dispute exists
between Tenant and Landlord as to Landlord’s right to draw from the Letter of
Credit. No condition or term of the Lease shall be deemed to render the Letter
of Credit conditional to justify the issuer of the Letter of Credit in failing
to honor a drawing upon such Letter of Credit in a timely manner. Tenant agrees
and acknowledges that Tenant has no property interest whatsoever in the Letter
of Credit or the proceeds thereof and that, in the event Tenant becomes a
debtor under any chapter of the Federal Bankruptcy Code, neither Tenant, any
trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or
limit Landlord’s claim and/or rights to the Letter of Credit and/or the
proceeds thereof by application of Section 502(b)(6) of the Federal
Bankruptcy Code.


 


           5.             Landlord and Tenant acknowledge and
agree that in no event or circumstance shall the Letter of Credit or any
renewal thereof or substitute therefor be (i) deemed to be or treated as a
“security deposit” within the meaning of California Civil Code Section 1950.7,
(ii) subject to the terms of such Section 1950.7, or (iii) intended
to serve as a “security deposit” within the meaning of such Section 1950.7.
The parties hereto (A) recite that the Letter of Credit is not intended to
serve as a security deposit and
such Section 1950.7 and any and all other laws, rules and regulations
applicable to security deposits in the commercial context (“Security Deposit
Laws”) shall have no applicability or relevancy thereto and (B) waive any
and all rights, duties and obligations either party may now or, in the future, will have relating to or arising from the
Security Deposit Laws.


 


1

















 


6.             Notwithstanding
anything to the contrary contained in this LC Addendum, upon Tenant’s written
request to Landlord made not earlier than the expiration of the twenty-eighth
(28th) month of the Term of this
Lease, Tenant shall have the right to reduce the Letter of Credit Amount to Fifty Thousand Dollars
($50,000.00) provided each of the following conditions are met: (i) Tenant
shall not have been in Default at any time prior to such written request; and (ii) at
the time of such written request, Tenant’s current financial statements shall
evidence that the cumulative amount of short term securities and cash held by
Tenant are a minimum of Eight Million Two Hundred Fifty Thousand Dollars
($8,250,000.00).


 


2

















 


EXHIBIT 1 TO LC ADDENDUM


 


 


 


Contact Phones:                       


 


IRREVOCABLE STANDBY LETTER OF CREDIT


 


	
                    ,
  20

  	
   

  	
  Our
  irrevocable standby Letter of Credit:

  
	
  Beneficiary:

  	
   

  	
  No.

  
	
  [LANDLORD
  ENTITY AND ADDRESS]

  	
   

  	
  Applicant:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Amount:
  Exactly USD $

  
	
   

  	
   

  	
  (                    
  and   /100 Dollars)

  
	
   

  	
   

  	
  Final
  Date of
  Expiration:                 [INSERT

  
	
   

  	
   

  	
  DATE
  WHICH IS 60 DAYS AFTER LEASE EXPIRATION DATE]

  



 


We (the “Bank”) hereby issue our irrevocable standby Letter of Credit No.
                     
 in Beneficiary’s favor for the
account of the above-referenced Applicant, in the aggregate amount of exactly
USD
$                 .


 


This Letter of Credit is available with us at our above office by
presentation of your draft drawn on us at sight bearing the clause: “Drawn
under           [INSERT NAME OF BANK] Letter of Credit No.                 ”
and accompanied by the following:


 


1.                              Beneficiary’s
signed certification purportedly signed by an authorized officer or agent
stating:


 


(A)        “ Beneficiary, as
landlord, is now entitled to draw upon this Letter of Credit pursuant to the
terms and conditions of that certain lease agreement dated
                       
for premises located at                                             ”;
or


 


(B)         “The Bank has notified
us that this Letter of Credit will not be extended beyond the current
expiration date of this Letter of Credit and Applicant has not delivered to
Beneficiary at least thirty (30) days prior to the current expiration of this
Letter of Credit a replacement Letter of Credit satisfactory to Beneficiary.”


 


 2.                               The original of
this Letter of Credit.


 


Special
conditions:


 


Partial
draws under this Letter of Credit are permitted. Notwithstanding anything to
the contrary contained herein, this Letter of Credit shall expire permanently
without renewal on
                           
[INSERT DATE WHICH IS 60 DAYS AFTER LEASE
EXPIRATION DATE].


 


This
Letter of Credit shall be automatically extended for an additional period of
one (1) year, without amendment, from the present or each future expiration
date but in any event not beyond
                          
[INSERT DATE WHICH IS 60 DAYS AFTER LEASE EXPIRATION
DATE] which shall be the final expiration date of this Letter of
Credit, unless, at least thirty (30) days prior to the then current expiration
date we notify you by registered mail/overnight courier service at the above
address that this Letter of Credit will not be extended beyond the current
expiration date.


 


We
hereby agree with you that all drafts drawn under and in compliance with the
terms of this Letter of Credit will be duly honored upon presentation to us of
the documents described in Paragraph 1 above on or before the expiration date
of this Letter of Credit, without inquiry as to the accuracy thereof and
regardless of whether Applicant disputes the content of any such documents or
certifications.


 


This
Letter of Credit is transferable and any such transfer may be effected by us,
provided that you deliver to us your written request for transfer in form and
substance reasonably satisfactory to us. Beneficiary may, at any time and
without notice to Applicant and without first obtaining Applicant’s consent
thereto, transfer all or any portion of Beneficiary’s interest in and to the
Letter of Credit to another party, person or entity, regardless of whether or
not such transfer is separate from or as a part of the assignment by
Beneficiary of Beneficiary’s rights and interests in and to the Lease. The
original of this Letter of Credit together with any amendments thereto must
accompany any such transfer request:


 


Except
so far as otherwise expressly stated, this documentary credit is subject to the
International Standby Practice (1998 Revision), International Chamber Of
Commerce Publication No. 590.


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  signature

  	
   

  



 


	
   

  	
  Please
  direct any correspondence including drawing or inquiry quoting our reference
  number to the above referenced address.

  



 


3

















 


Addendum 2

Option to Extend


 


This
Option to Extend Addendum (the “Addendum”) is Incorporated as part of that
certain Lease dated for reference purposes as of April   , 2009,
by and between FSP Montague
Business Center Corp., a Delaware
corporation (“Landlord”) and AltiGen Communications, Inc., a Delaware
corporation (“Tenant”) for the leasing of certain premises located in the
Montague Business Park at 410 East Plumeria Drive, San Jose, California (the “Premises”).
Any capitalized terms used herein and not otherwise defined herein shall have
the meaning ascribed to such terms as set forth in the Lease.


 


1.             Grant
of Extension Option. subject to the provisions, limitations and
conditions set forth in Paragraph 5 below, Tenant shall have an option (“Option”)
to extend the initial term of the Lease for five (5) years (the “Extended
Term”).


 


2.             Tenant’s
Option Notice. Tenant shall have the right to deliver written
notice to Landlord of its intent to exercise this Option (the “Option Notice”).
If Landlord does not receive the Option Notice from Tenant on a date which is
neither more than two hundred seventy (270) days nor less than one hundred
eighty (180) days prior to the end of the initial term of the Lease, all rights
under this Option shall automatically terminate and shall be of no further
force or effect. Upon the proper exercise of this Option, subject to the
provisions, limitations and conditions set forth in Paragraph 5 below, the
initial term of the Lease shall be extended for the Extended Term.


 


3.             Establishing
the Initial Monthly Base Rent for the Extended Term. The initial
monthly Base Rent for the Extended Term shall be equal to the then Fair Market
Rental Rate, as hereinafter defined. As used herein, the “Fair Market Rental
Rate” payable by Tenant for the Extended Term shall mean the Base Rent for the
highest and best use for comparable space at which non-equity tenants with
credit quality equivalent to Tenant, as of the commencement of the lease term
for the Extended Term, will be leasing non-sublease, non-equity, unencumbered
space comparable in size, location and quality to the Premises for a comparable
term, which comparable space is located in the Building and in other comparable
buildings in the vicinity of the Building, taking into consideration all
out-of-pocket concessions generally being granted at such time for such
comparable space, including the condition and value of existing tenant improvements
in the Premises. The Fair Market Rental Rate shall include the periodic rental increases
that would be included for space leased for the period of the Extended Term.


 


Following
Landlord’s receipt of the Option Notice, Landlord shall deliver to Tenant the
proposed Fair Market Rental Rate for the Extended Term. Tenant shall have
fifteen (15) days following Tenant’s receipt of Landlord’s proposed Fair Market
Rental Rate for the Extended Term in which to give written notice to Landlord
that Tenant (a) disagrees with Landlord’s proposed Fair Market Rental
Rate, or (b) accepts Landlord’s proposed
Fair Market Rental Rate. If Tenant fails to deliver such written notice
within such 15-day period, Tenant shall be deemed to have disagreed with
Landlord’s proposed Fair Market Rental Rate for the Extended Term. If Tenant
notifies Landlord in writing that Tenant disagrees with Landlord’s proposed
Fair Market Rental Rate within such 15-day period, or if Tenant is deemed to
have disagreed with Landlord’s proposed Fair Market Rental Rate, then Landlord
and Tenant shall endeavor in good faith to agree upon the Fair Market Rental
Rate within the next twenty (20) days. If Landlord and Tenant are unable to
agree upon the Fair Market Rental Rate within such 20-day period, then Landlord
and Tenant each, at its cost and by giving notice to the other party, shall
appoint a competent and impartial commercial real estate broker or MAI
certified appraiser (hereinafter “broker”) with at least five (5) years’
full-time commercial real estate brokerage experience in the geographical area
of the Premises to set the Fair Market Rental Rate for the Extended Term. If
either Landlord or Tenant does not appoint a broker within ten (10) days
after the other party has given notice of the name of its broker, the single
broker appointed shall be the sole broker and shall set the Fair Market Rental
Rate for the Extended Term. If two (2) brokers are appointed by Landlord
and Tenant as stated in this
paragraph, they shall meet promptly and attempt to set the Fair Market Rental
Rate. If the two (2) brokers are unable to agree upon the Fair Market
Rental Rate within ten (10) days after the second broker has been
appointed, the two (2) brokers shall attempt to select a third broker,
meeting the qualifications stated in this
paragraph within ten (10) days after the last day the two (2) brokers
are given to set the Fair Market Rental Rate. If the two (2) brokers are unable to agree on the third
broker, either Landlord or Tenant by giving ten (10) days’ notice to the
other party, can apply to the Presiding Judge of the Superior Court of the
county in which the Premises is located for the selection of a third broker who
meets the qualifications stated in this
paragraph. Landlord and Tenant each shall bear one-half (1/2) of the cost of appointing
the third broker and of paying the third broker’s fee. The third broker,
however selected, shall be a person who has not previously acted in any
capacity for either Landlord or Tenant. Within fifteen (15) days after the
selection of the third broker, the third broker shall select one of the two
Fair Market Rental Rate submitted by the first two brokers as the Fair Market
Rental Rate for the Extended Term, which selection shall be final and binding
upon Landlord and Tenant. If either of the first two (2) brokers falls to
submit their opinion of the Fair Market Rental Rate within the time frames set
forth above, then the single Fair Market Rental Rate submitted shall
automatically be the initial monthly Base Rent for the Extended Term and shall
be final and binding on the parties. Each party shall pay the cost of its own
appraiser and shall share equally the cost of the third appraiser.


 


In
no event shall the monthly Base Rent for any period of the Extended Term as
determined pursuant to this Addendum, be less than the highest monthly Base
Rent charged during the initial term of the Lease. Upon determination of the initial
monthly Base Rent for the Extended Term pursuant to the terms outlined above,
Landlord and Tenant shall immediately execute an amendment to the Lease. Such
amendment shall set forth among other things, the initial monthly Base Rent for
the Extended Term and the actual commencement date and expiration date of the
Extended Term. Tenant shall have no other right to further extend the initial
term of the Lease under this Addendum unless Landlord and Tenant otherwise
expressly agree in writing.


 


4.             Condition
of Premises and Brokerage Commissions for the Extended Term. If Tenant
timely and properly exercises this Option, in strict accordance with the terms contained
herein: (1) Tenant shall accept the Premises in its then “As-Is” condition
and, accordingly, Landlord shall not be required to perform any additional
improvements to the Premises; and (2) Tenant hereby agrees that it will be
solely responsible for any and all brokerage commissions and finder’s fees
payable to any broker now or
hereafter procured or hired by Tenant or who otherwise claims a commission
based on any act or statement of Tenant (“Tenant’s Broker”) in connection with
the Option. Tenant hereby further agrees that Landlord shall in no event or
circumstance be responsible for the payment of any such commissions and fees to
Tenant’s Broker, and Tenant shall indemnify, defend and hold Landlord free and
harmless against any liability, claim, judgment, or damages with respect
thereto, including attorneys’ fees and costs.


 


5.             Limitations
On, and Conditions To, Extension Option. This
Option is personal to Tenant and may not be assigned, voluntarily or
involuntarily, separate from or as part of the Lease, except that this Option
may be assigned to an Affiliate pursuant to a Transfer of this Lease to an
Affiliate. At Landlord’s option, all rights of Tenant under this Option shall
terminate and be of no force or effect if any of the following individual
events occur or any combination thereof occur: (1) Tenant has been in
Chronic Default at any time during the initial term of the Lease, or is in
Default of any provision of the Lease on the date Landlord receives the Option
Notice; and/or (2) Tenant has assigned its rights and obligations under
all or part of the Lease or Tenant has subleased all or part of the Premises
(except to an Affiliate); and/or (3) Tenant’s financial condition is not
sufficient at the time the Option Notice is delivered to Landlord to meet
Tenant’s obligations during the Extended Term; and/or (4) Tenant has
failed to exercise property this Option in a timely manner in strict accordance
with the provisions of this Addendum; and/or (5) Tenant no longer has
possession of all or any part of the Premises under the Lease, or if the Lease
has been terminated earlier, pursuant to the terms and provisions of the Lease.


 


6.             Time is
of the Essence. Time is of the essence with respect to each and every time
period set forth in this
Addendum.


 


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